Love and Money: Playing Nice in the Sandbox

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How could love and money ever be a problem? When two people marry, there can be that idea that you and your significant other will agree on the important things – like finances. You know each other so well; you agree on so many things; how could it be hard? Even people who talk about finances might not be “talking” about finances.

I know a lot of things about our financial situation – I knew my husband paid for this and I paid for that. I knew my husband had this much money in savings and investments and that much in debt. He knew my numbers. We knew lots of things and made lots of plans, but it was largely my plans and his plans. Honestly, I didn’t even realize we were doing this until I started this blog.

Love and Money: The talk

Recently I started thinking a little differently about how we handled our finances and started asking some questions. I sat down with my husband and as it turns out, we have $29,000 in consumer debt. Here is the breakdown:

Line of Credit: $17000.00

Credit Card: $10500.00

Store Credit Card: $1200.00

I knew all of these numbers individually but until I sat down with my husband and did the math on everything combined, this was big news to me. I then asked about the plan for paying down the debt and I was met with silence. Then there were crickets. Then some tumbleweeds rolled by. Sigh…

As it turns out, we were only able to make the minimum payments on each account because all our money was tied up. We made $140,000 last year and could only afford minimum payments. In all fairness, we did have some pretty big expenses like planning our wedding and buying a house in the last year. We also had an unanticipated expense of $10,000 that needed to be paid within that time period as well.

So we needed a plan of action, we sat down and put together a strategy for how we were going to deal with all this debt. This is what we came up with:

Currently, I am covering for a maternity leave position and am making extra money totalling $360.00 per paycheck.

•  Credit Card: We have set up a plan for husband and I to pay towards the Visa until we’re under our spending limit of $10,000 by May 3^rd to avoid over limit fees and other extra charges.
• Store Credit Card: Husband will make his usual payment and I will use my extra money to help pay off the $1300 high interest store credit card by June 26^th.
• Back to Credit Card: After June, I will refocus and use the extra money to pay down the credit card and to bring the balance to $7000 by August 24^th. (I wanted specific dates so these goals were real – they coincide with my pay days, hence the randomness)

In total, we’ll have paid off $4300.00 of our consumer debt in four months and will have eliminated a high interest debt (29.99%) and overlimit fees on our credit card.

Love and Money: Cutting costs

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Currently, we spend between $800 to $900 on groceries every month for two adults and one teenager – I’m literally cringing as I write these numbers. We did a little research and found a great tip on Canadian Budget Binder to shop three times a month instead of four. The idea is that you can live off what’s in your pantry and fridge for the last week instead of stockpiling more stuff that’s likely to expire or start molding. It prevents waste, forces us to get creative, and saves us money. Total three-way win. We are starting this next weekend and will live off the pantry of plenty – saving us $200 and using up food that would otherwise spoil.

Our goal is to cut down our grocery bill to $650 a month and shopping three times in a month is only our first step. We will continue to research and learn more ways to save money in this area so we can start living within our new grocery budget limit. The extra money that we save from groceries will go towards husband’s entertainment fund as his is sitting at $220 a month – which is not realistic for either of us to live on right now.

Love and Money: Increasing Income

Currently we do not have a sustainable way to pay down our debt, build an emergency fund, or hope to go on a vacation of any sort. We’re talking vacation a la pup tent in the backyard might be a financial stretch for us right now.  With this in mind, we have planned to take on a roommate who will reside in our furnished basement downstairs. We believe this can bring in an extra $700 a month, $200 to be saved in case there is a rise in utilities or other household expenditures associated with having a roommate. The remaining five hundred will be divvied up between building an emergency fund; putting away for something fun; and paying down debt. We still have to work out when the roommate will come but the plan is to start getting our basement ready this weekend (Shhh, husband doesn’t know this part yet).

Husband will also look for job and salary promotions at other companies since his current company is quite small and doesn’t offer reasonable opportunities for advancement. I will also look for other opportunities that offer increases in salary and hours since I currently only work part time.

Even though we talked about some pretty gnarly things last night, I think we were able to work through a lot of stuff that would have eventually put stress on our marriage if we hadn’t dealt with them. We have a plan and a forward direction. I am content.

Link Love

Skinny Seahorse Project Life – February Part Deux *Dianne does these wonderful things with pics of her little ones – like digital scrapbooking. Worth checking out!

Canadian Budget Binder Is Budget Failure Your Own Fault? *As usual, Mr. CBB brings it with a great perspective on budgeting being “Life’s business.”

Making Sense of Cents Should I Pay Off My House Early? *Michelle has a good list of pros and cons for getting rid of your mortgage.