As I mentioned in my last post, we had to find some ways to adjust to the reality of our lost income when I stayed home to provide care and education for our youngest adopted daughter. I have to admit that I had some pie-in-the-sky ideas about how my days would go and how I would be working part-time from home doing what SAHMs do when they need to bring in money. Soooooooo naive.
The reality is that I had no idea how much time therapy was going to take and that my daughter’s complete hatred of education was not limited to mainstream classrooms, that I had so little extra time, and I had to make some tough choices.
We went back to paying the minimums on the cards in most cases. When extra $ showed up, we threw it at bills as soon as we could.
We set up a fund-raising website. In the state of California, homeschool requires the parent to set up a private school. So we did and we did something that is really hard for me – we asked people for money. Now, I only did that for about a month until I just got too embarrassed and I stopped, but we did net $400 from the effort, which really helped with school supplies and field trips.
We cancelled and cleaned out our storage unit…kind of. We’re still working through all of the boxes, but we decided not to pay any extra and to really look at the things that we have. I think it is safe to say that we have gotten rid of over 1/2 of it.
We planted and grew vegetables. It was 40% effective. We had some fresh veggies, and we got time in the sunshine and “fresh” air (we do live in L.A. after all).
We started shopping 1x/week. Which is directly related to #6
We planned every single meal and snack. It really helped to keep costs down, which is something we had struggled with for a long time.
We stopped drinking soda. I haven’t done a real analysis of this, but I am confident that we saved several hundred dollars with this choice. It was tough, but I am really glad we did it.
We went gluten-free. Now, I know this is a little controversial and it is WAY trendy, which we are not, but…we had done a 10-day fast from gluten, and wouldn’t you know it, 3 of our 4 family members dropped major weight and lost puffiness. So, that also means that we can’t eat out very often, and if we do, it is generally a place with fresher/non-processed food. Which is good for our health and our budget.
I got a part-time job. This was not originally the plan, and if fact, when I was approached with the position, I said ‘no’ because I didn’t want to take the time away from my family when we were trying to do some important therapy. But, we pondered and realized that 1 evening and 1 weekend-day each week should be do-able and would really help out with the finances. And it has!
So, there you go – some of the things we did to counteract our shrinking income!
I have a kind of sad history with this blog in that I have had some long periods where I have fallen off the face of the earth and have neglected to record what is going on. It has actually caused me to feel some guilt, which is kind of silly, because what I write here may cause someone to think, but it isn’t the life and death work with which I have been involved with while I have been away.
So, I decided I won’t feel guilty, but I will share what has been going on for the last 15+ months.
Our two daughters moved in with us in July of 2011. They were in the foster care system and we fostered them for a long time until we were finally allowed to adopt them. They were older and had experienced a lot of trauma, which meant that there were some significant challenges to come for all of us. I am NOT whining, but I can tell you that this has been the most costly and difficult thing that I have ever done. My husband and I have both had to leave jobs, lost friends, income and have found ourselves isolated on several occasions. This is a tough spot to be in when you are trying to reduce debt. When the rest of your life feel constricted, the last think you want is to feel like you can’t provide yourself some self-care because you wanted to pay that bill down by $20 extra. But we still managed to, even if it wasn’t as much as we had originally planned.
Well, after 7.5 years of slogging along part-time, I finally (!!!!!!) finished my masters degree! It has been great not to have to pay for tuition any more. And the last two years, we decided not to apply for another student loan, but to pay out of pocket. Which hurt. A lot. But we didn’t incur any additional student debt, which is good, because that bad boy bill is HIGH.
This has been the biggest area of change. When I was last “current” on the blog, my husband had finally gotten a new job after being fired from his last job when his performance at work was affected by the special needs of our children. He found a position at an organization that really understood where he was coming from and that supported his focus on family over work. His 10 months of unemployment was PAINFUL. But then, when he went back to work, we discovered that our youngest was disintegrating at school. Eventually, the school asked us to come in for a meeting in the Spring of 2013 to let us know that they didn’t want our little 2nd grader there because she was too disruptive for the class. And this is the best school in the district (and they would not give us a permit to go to another district), so my husband and I had to talk and pray about the whole thing. Eventually, we came to conclusion that we would homeschool for the 2013-2014 school year to address the emotional and psychological needs of our little one. Which meant a 58% reduction in income. In your head, remember what E.T. said to Elliot when he cut his finger on the saw blade – “OOOOOOOOUUUUUUUUUUUUUUCH!” Yes, that is what that felt like.
I’ll write more about some of the things that we did to replace income, but it should be clearer that I was away for a good reason and that while it kept me so drained that I couldn’t write, it didn’t stop our debt journey.
Thanks for reading and I look forward to sharing more soon!
Yesterday, after getting caught up on my numbers, I noticed something that bears mentioning…
We are at 51% paid-off!
Wait, what?!? We rolled right past the 50% celebration! Oh, no!
Well, the great news is that we’ve reached this milestone. I’m a little “sad” that it has taken us 4 years to reach this point, but I’m still thankful. It isn’t like we haven’t had some set backs during this time and there was that whole year where we were just in survival mode as we were adjusting to our new family reality. That being said, my spreadsheet and Quicken seem to think we can knock the rest of this out in 20 months, so LET’S DO THIS THING!!!
Back in January of 2009, as we were deciding if we were going to file bankruptcy or not, we had been talking to my husband’s creditors, which was really easy to do as they were calling us at least once every day. I encouraged him to let them know that we were close to filing and to ask them if they would be willing to 1) drop the principle, and 2) drop the interest rate. One of our creditors proposed a significant settlement deal that was really hard, but resulted in a cancellation of debt.
At the time, I was advised by a family member to look out for tax forms to include in our 2009 tax return, but that we shouldn’t be concerned about it affecting our taxes. This family member happens to work very closely with the IRS, so I trust them to steer me in the right direction.
When I started working on our taxes last month, I had forgotten that we were advised to take care of that debt cancellation form in a specific way. Luckily, when I got it in the mail, I talked to the family member and she clarified that:
If you are insolvent at the time that your debt is cancelled, you do NOT have to include the cancellation in your income (*)
You have to fill out a special form (IRS Form 982 – Reduction of Tax Attributes Due to Discharge of Indebtedness) and have records that show that you were, in fact, insolvent at the time of cancellation. In our case, were were (sadly) VERY insolvent – we had over $60K in debt and no real assets (under $20K worth of personal property), so we qualify for this.
So, we are able to take the $4,500+ that was written off and leave it out of our income, which helped to make our potential tax return even greater (yahoo!)…
We didn’t include this amount in our starting amount (and some of out other debts), because we started the blog after we had already started paying off our debt, so the reality is that we actually started this journey at over $70K…yikes… but to know that we have reduced our debt by more than $30K in a year – that tells me that we can get to the end…
* I am not a tax advisor and every person’s situation is different. Consult your tax professional for information about your taxes.
I was talking to my husband about our milestone of getting past $10K in debt reduction and he asked me if the figure included the reduction that he negotiated for one of the liabilities. Um….no?
So it looks like I’ll need to adjust our “starting out” numbers in the next few weeks when we find out the total amount that was written off by the creditor – we think it was around $4,700 – which would bring our total debt reduction to $15,000. Wouldn’t *that* be something!
The last couple of weeks have been spent contemplating and thinking about what the next post should share about this journey, so even though I haven’t been posting new content, I have been thinking of you, dear readers.
As long as I can remember, I’ve been determined that I had no interest in ever owning a house and that I would be just fine with moving around the rest of my life nomad-style. I married an artistic type, and he seemed agreeable to that and the only time that we really brought up owning a house was when we had the “If we win the lotto…” conversations.
Part of this is the fact that I grew up in a military household and the wanderlust that was instilled in my formative years took root – to date, I have moved 25 times. Yes, 25.
I can’t identify what has made me turn a corner on this issue, but in the last few weeks, I have started watching HGTV (specifically My First Home and House Hunters) with my husband and we’ve started talking about what we would like in a house. The market in Los Angeles is truly a buyers market at this point (I think it has fallen at least 25% in the last year or so) and there are some amazing properties out there that are way more reasonably priced than they were 3 years ago.
Here’s the irony: with the $60K that we are going to pay off in this process, we could have had a great down-payment and be set up to actually afford house payments, especially in this market.
I had always felt the weight of this debt in other ways, but it has never been tied to the idea that we are going to miss out on getting a house in LA when they are more affordable. I’m not a person that has many true regrets – but this is going to be one of them.
I guess that we can take comfort in knowing that we’ve never been closer to freedom than we are right now. And every day we get closer.
Have any of your financial decisions caused you to have regret? How have you addressed this or changed the situation?