Financial Disaster Preparedness

Every year at work, we get an emergency plan. 

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Where to go in case of fire, how to handle a bomb threat, where to go for a hurricane, etc.  I usually just file it away and pray I miss the fire drill.

But one of my recent obsessions has been disaster preparedness.  (Thank you, Glenn Beck.)

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My family sat down and talked about where we would go, what we would bring, how we would survive if disaster struck.  And thanks to my aunt’s coupon tips, I’ve been able to start a small stockpile with using my same grocery budget as I’ve always had.  (Coupons are amazing!  I’m kicking myself for not using them forever!!!)

In addition to my small stockpile of necessities, I’m also working on making a financial disaster preparedness kit.  Something I can just grab & go if I have 5 minutes to get everything & get out.  (Or if you are stuck at a hospital, something you can get someone else to bring you.)

Here is the list I have developed:

·        A copy of our will (Note to self to update it and add my 3^rd child - whoops!)

·        List of all bank accounts

·        Most recent loan statements – mortgage, auto, student, etc…

·        List of all credit/debit cards with account & phone numbers

·        A medical power of attorney for my husband and I.

·        A copy of every family member’s social security card & birth certificates

·        CASH!!!  And a checkbook!

·        Extra keys

·        Copies of all insurance policies – or at least a list of the policies, number, value, agent, etc…

·        A list of medications, prescriptions

·        A list of emergency contacts such as family and bosses’ names & phone numbers.

·        A list of every bill with approximate amount due, due date, account numbers and payment addresses

My box is slowly taking shape.  If you can think of more, I would love some suggestions on things to add. 

The Sweetheart Banquet

One month ago, we achieved something better than platinum status at American Express…we became debt free!  But my poor husband can’t shake the “debt free” intensity…

Saturday night, we had our church Sweetheart Banquet.  My husband and I were picked to play the Newlywed Game.  (We won last year, but I that certainly didn’t give us any confidence.)  One of the questions that was asked to me was

If we won the lottery, what would be the first thing my husband would do:

a)     Pay off debt

b)     Buy a new house

c)      Buy a new car

d)     Take an exotic vacation

First, we don’t play the lottery…EVER.  I might buy a Powerball ticket if I’m going to the store with someone that is buying one.  (That’s happened twice since I turned 18.)  I can’t stand to waste even a dollar, and to me, the lottery is a waste.  If I’m going to gamble, I’m going to play the roulette tables at a casino.  At least there I have a 50/50 chance.

Since our home is currently on the market and we’re dying to build a house large enough for 2 adults, 3 kids, 3 dogs, and other various animals I’m sure to come, I immediately said BUY A NEW HOUSE.  All the other questions – I wasn’t so sure of my answer, but I knew we’d get this one right.

They bring the husbands out and ask them the questions.  What does my husband say, “Pay off debt.”  I could’ve killed him.  I stomped on his foot (with my brand new high heels) and said, “We don’t have any!” 

He replied, “I know, but if we did that’s what I do first.”

I felt like a dog chasing his tail.  Needless to say, we did not win the game.  And even now I’m scratching my head over the answer.  I guess we’re just gazelle intense zombies that the debt free status is still too new for us to comprehend.  You hand us money and we immediately try to pay off something…

The Circus Circus

As promised, here’s our circus spending run down

$10.59 – Dinner at Sam’s Club (for 4 people!!!! – best deal of the night!)

$4 – 2 programs

$20 – 2 winky blinkies (a travesty!)

$13.50 – 2 tubs of popcorn & 2 drinks

$6 – 1 pony ride

Grand Total of $54.09 for a wonderful night.  I was beyond thrilled seeing as how I only withdrew $60 from the ATM!  My son is already talking about next year…

Special vs. Spoiled

So this weekend something very exciting is happening in my house.  Something I’ve dreamed about doing for years…

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We’re taking the kids to the circus! 

I am so ridiculously excited – way more than any adult should ever be about a circus.

As a kid, I loved the circus.  I still have incredibly vivid memories of being in the car on the way - we always went at night, and pulling in and the civic center was all lit up.  Our family and my cousin’s family would go together.  I can close my eyes and perfectly picture them turning off the lights and the crowd waving their “Winky Blinkies.”

Don't click this link unless you wanna cry at how cheap these things really are.

Now, we were not rich by any means.  Today’s standards would have probably classified us as poor.  I have no idea how my parents afforded to take their family of five to the circus, but they did it.  We always got popcorn and cotton candy – and that was usually it. 

But I remember the year my parents bought us “Winky Blinkies.”  That was a big deal.  We couldn’t afford just to throw money away every year on a new one.  We actually saved them and took them back year after year.   I remember longing after a giant character balloon.  (Which my parents rightly knew would be a total waste of money.) 

My husband and I both had amazing childhoods that we wouldn’t trade for anything, but I remember wanting a “Winky Blinky” so bad.  And I think that leads us to overindulge our kids at times.  (But that’s for a therapist to figure out.)

In this “disposable” society, how many of us moms would have our children keep a $10 toy, year after year, to only take it to the circus?  We’d say it wasn’t worth it.  But that was a lot of money (3 kids x 3 toys = $30) to my parents.

Which brings me to a very interesting point, how do you know the difference between spoiling and something special?   We are in a place, financially, we can do things for our children that we couldn’t do for them a year ago.  But I never want to have children who think that they get a toy every time they go to the store.  Or isn’t satisfied with a Winky Blinky. 

This weekend will be an interesting test of how we balance our financial freedom and parental restraint.   Stay tuned next week for the run down of our spending…

The Coupon Queen

So, this Saturday, I dared to take all three of my children to see my grandparents – their great-grandparents.  (And they truly live up to that title!)  This was the first solo trip back to the grandparents since Thanksgiving.  (Eli wandered off and we found him on the edge of the pond!!!  His guardian angel worked overtime that day!)

My aunt and uncle stopped by.  I’ve always thought of them as super-wise with money and most everything else.  (Except my aunt’s love of artichokes and mayonnaise…ugh.)  She produced a receipt nearly as tall as I was where she had saved over $100 using coupons!!!

Now I’ve saved some money over the years with coupons, but not hundreds.  My aunt is what I would call, A Coupon Queen.  She does this on a regular basis.  If you ever seen one of those specials on TV where they walk out with baskets of groceries for $2.34 – that’s her. 

Now, I don’t need a pantry full of deodorant or dryer sheets.  But she’s inspiring.  Over the last two weeks, I’ve done what she told me and probably already saved $150 on stuff we use and need.  I’m shocked. 

On day one, I promised I’d be honest so here’s my honesty.  Our grocery budget for a month is $500.  Some of you may be shocked at how high and some how low.  Remember there are five of us with two in diapers and one on special care, super expensive baby formula.  I’ve stretched that budget so ridiculously far in the weeks since I’ve followed in the Coupon Queen’s steps. 

I had never taken the time to clip out most all the coupons and match them up with sale papers.  (I still skip the coupons for the joint replacement supplements and elastic waist band jeans.)  

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But I was shocked at how much stuff you can get free or less than .50 cents just by using the right coupons in the right places.  I had always considered myself pretty smart with coupons, but I have to say, I’m almost embarrassed at the money I’ve left on the table by not couponing. 

There are a million websites to teach you the tricks of the trades, coupon databases, and even sites that match up the deals with the coupons for you. 

It takes a little time to clip the coupons, but an office supply freak like me, of course, has a paper cutter so it takes less time. 

Let this be a lesson to all of us.  Me, included.

Coupons equal more money in my pocket, and double the money, if I am shopping in the right places. 

It's the Most Wonderful Time of the Year

I’m singing the song in my head as I type. 

It’s tax season!!! 

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All return preparers hate their lives from about January 20 through April 15.  They don’t see their friends or family.  They’re working 10-12 hours, sometimes longer, a day.  But I enjoy tax season.  I love the questions, my phone ringing off the hook twelve times a day because someone’s aunt wants to know if they can claim their dog food as a business expense. 

You’re probably not surprised when I tell you that I’ve already done our taxes.  I start on them about in December to get an idea of what we’re looking at.  We are getting a whopping refund this year…it helps when you have three kids…in daycare.

But actually, getting a huge refund is a financial no-no.  A lot of us, me included, are so terrified of owing a dime to the IRS, we go overboard on our withholding.  Kinda like a forced savings plan.

Can you imagine giving $2400 to your mechanic, letting him holding it all year, actually investing it and earning interest?   Then at the end of the year, he only gives back the $2400. We’d cry thievery!  That’s our interest and earnings! 

Our Money!!!

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People, I am here to tell you that’s basically what you and I do when we get a refund.  They get our withholdings all year, “invest” it, earn interest & dividends, then, on April 15, give you back only the principal.  (Not a big fan of government “investing” anyhow.)

I once heard on the radio a guy complaining that he only got $4 back.  I called in and told him he was the perfect taxpayer! 

Rather than giving your mechanic the $2400, wouldn’t it be so much nicer to have an extra $200 every month?  You could pay off more debt, invest more, give more – whatever place you’re at – you’d have more, to do more. 

If you’re getting a large refund for 2010, you really should change your W-4 to have less withheld this year.  You can find the form (and a handy-dandy calculator) at http://www.irs.gov/ or through your payroll office.  Just complete it and give it to your HR manager.  You can file it any time. 

Now, back to singing…

Making the Leap – Switching from Credit to Cash

So yesterday, I got an excellent question – How do you make the switch from credit cards to cash?

I love these questions – makes my whole day.

I, of course, can't speak for everyone, but here's our story:

When we were first married, we combined our credit card debt and it totaled about $6000.  That was our wedding rings, couple of school payments, some honeymoon expenses (and truthfully, thousands of just plain waste.)  We worked diligently to pay off that credit card.  I still remember it was a Discover Card and had a 0% rate and we paid $600/mo on it.  It took us 10 months.  I remember emailing my mom and my sister, with such excitement, when we paid that last payment. 

I wish I was kidding when I say the very next month we ended up with a credit card bill of over $1000 that we couldn’t pay off.  We were credit card debt-free for less than one month.  I doubt we are the only ones out there that did this.  (Feel free to comment and make me feel better – lol!)  It  was a crushing defeat that began a slippery slope of even accumulating even more debt.

One of our main problems was that we used our credit card for everything.  We paid for groceries, gas, eating out, car repairs, etc. with our favorite plastic accessory.  (I even had a keychain credit card that was the IT item about as long as jellie shoes.) 

It’s hard for two people to be accountable when you do not have to keep a record – you just wait for the bill.  It was impossible to figure out how much was spent from each category.  We couldn’t keep track and before we knew it, our bill was way over our budget. 

The first step in our debt-free journey was to convert to cash.  Easier said than done.  If you think about it, your credit card statement is paid the month after you spend.  It can cause real problems when you try to pay your credit card and pay your monthly expenses because you’re basically paying two months worth of living expenses with one month’s income. 

For most of us, we wouldn’t have debt if we had savings.  As hard as it is, the only way to swing it was to pay only the minimum payment that first month.  It pained me to watch our debt load increase by $XXX (or maybe it was even $XXXX!!!)  But that was the only way we could do it.

Some people are lucky enough to have some cash saved away.  (No, this is not your FPU $1000 emergency fund.) If you are one of those lucky ones, it’s easy - pay off the credit card then start fresh the next month with cash.

(Side bar conversation – I always get baffled by the callers to The Suze Orman Show who have $30,000 in savings and $15,000 in credit card debt.  Seriously, what kind of interest rate are they getting on that savings to make it worth carrying that kind of debt load?  Anyhow…) 

We now pull out enough cash to last us two weeks and divide it up into our envelope system. (Heard of Dave Ramsey, ya'll???)  We pay the rest on bills and now that we have “leftover”, we transfer it to savings.  We leave enough in our checking account for gas.  (DR suggests even using cash for that, but I’m too lazy to go in stores – especially in sub-zero temperatures.) 

But one thing I learned from one of my new favorite shows, Till Debt Do Us Part, was when you switch to cash – WRITE IT DOWN!  Whether you write on envelopes (as DR recommends) or keep a “Budget Binder” (as suggested by Gail Vaz-Oxlade) – just write it down!  That way you, and your spouse, can look at any point in the month and see what was spent, where it was spent, and what you have left.  (And keep your receipts for 3 months.  If you need to return an item, without credit cards, most stores can’t trace your purchase.)