No. of Recommendations: 209
(Here's the first post in this series, also long:

So, I left myself sitting in the café in Nordstroms, sipping a nice latte with a stack of soul-salving purchases piled up around me (all “needed” for my impending job search, because obviously you can't wear 'used' clothing to a job interview), $60K on credit cards, $23K in car loans, no money and unemployed, blaming everybody but me for my problems. Whew. What a case of spoiled-brat-itis. I decided that, darn it, we (read as, my husband, because I personally was absolutely perfect and never spent a single dime on unnecessary purchases) were just going to have to stop.

When I got home, I set my voicebox to 'condescension' mode and gave him quite the earful. Oh, I was very careful to use the politic words 'we' and 'our'. WE were too far in debt, WE needed to cut OUR spending, it was vital that WE quit being such complete and utter morons (you moron!)…

After having chastised the husband (who, like the Far Side dog, undoubtedly had only heard blah-blah-blah GINGER blah-blah-blah GINGER blah-blah-blah), I immediately went to the phone and called up my favorite employment agencies. As usual for the time, I had a few things to consider right away – short term, long term, permanent placement. All keyboard-banging clerical jobs, paying pretty good due to my skill at Me Type Real Fast.

Then my husband came home with his former boss in tow, who sat down at my kitchen table and quizzed me on everything from basic math to how to get Excel to spit out a chart. “I want you to give your resume to this person in this agency,” he said at length. “And I will hire you as a data analyst. I think you can do it.” (BTW, that new interviewing suit I bought at Nordie's? Never wore it. I 'interviewed' in my jeans for this deal.)

And the job involved a six dollar an hour raise for me from my all-time high. This, my friends, was high society. I turned in my resume feeling somewhat nauseous – could I possibly live up to that kind of salary? My God, was I going to be running the company or something, for THAT kind of money?! I didn't know squat about data analysis, not even the littlest tiniest bit! But, undaunted by a piddly little thing like not knowing what the <<ahem>> I was doing, I plunged on in. (Turned out to be good at it, after a bit of flailing uselessly around being led patiently by the hand.)

The paychecks started coming. I'd love to report that at this point, I began applying them to our debts. That I took that massive increase in income and started snowballing our debts right on down. That I kicked butt and took names until we had achieved the financial freedom we had dreamed of!

Er, um, well, uh, actually…

I tried taking the new balance on each debt each month, dividing it by twelve (because, after all, since I was so wealthy now, I ought to be able to pay off sixty-thousand-dollars in debt in one year, right?!) and sending that payment in. Ahem. This was stupid beyond all reason, stupid even for me at my most spectacularly stupid. What ended up happening was, I would pay the first three bills that way as they came in and then all the others were a mad scramble to make ends meet. The checking account was perpetually overdrawn. The word 'oops' seemed to come out of my mouth an awful lot. I was wrecking the ship!

Have you noticed a word that has not come up yet? It starts with a 'B' and tends to be a topic of big conversation around here. B-bu-buh-buhdge-budget! Didn't have one. Didn't make one. Didn't really want one. I would go to the supermarket and pay $500, then complain that I didn't have any money and hadn't bought 'anything really, just the usual.' We'd eat out (charging it, of course) because I 'guessed' we hadn't spent 'that much' on it. And so forth, and so on.

It wasn't until I had been allegedly reducing our debt for almost six months (and found ourselves up to $65K on the cards, our all-time high) that I awkwardly began making a budget for us. A dim memory of my mother sitting at the kitchen table with a three-column ledger and a bunch of envelopes containing various amount of cash and bills surfaced in my brain – I went out and got a ledger book, and began writing.

I actually kind of wince to even write this. This is a poster child for the “Rookie Move”. I sat down and took all of our 'non-negotiable' liabilities. The minimum payments on the cards, the rent on the apartment, the car payments, PG&E, telephone, cable and so forth. I arbitrarily set our food budget to $100 a week, took out all entertainment, clothing, car repairs and maintenance, etc., took the total expenses and deducted them from the total take-home income, sat back and said, “Wow, this is great! I can have that Chevron card paid off in, like, a week!”

Anybody else see the problem here? The budget had no relation to reality whatsoever. It was a dreamland thing, stuff of mists and twilights. I pulled those numbers out of my hat and expected to smash our lives down into them. Right instantly then, too. I couldn't quit smoking cold turkey, I don't know why I thought I could quit anything else that way.

“Why isn't this working?” I would wail (as I lugged my Williams-Sonoma bag out to the car, laden with The Essential Thing I Lacked to make spaghetti) (GOD, I wish I were joking). “I'm trying so-so hard! Why is the world so mean? Why does God hate me? This isn't fair, this isn't right, I'm making so much money but I still have no money…

Then one morning soon after I had made this lame duck of a budget up, I was standing at a little espresso place. I had forked over $3, and was watching them put it into the cash register. I was scheming for ways to make more money, falling back on my usual 'work harder not smarter' method of survival. And suddenly I said to myself, “Hmm, I wonder how much you'd save if you just didn't buy this stupid, poorly made mocha?”

I took out my Palm Pilot, opened up the Expense application and entered the $3. For the rest of the week, every time I opened my purse, I would take out both my wallet and my Palm Pilot. Whatever came out of the wallet was entered into the Palm. It was an idle thought, a casual thought. It was a symptom of what I was becoming, a database analyst, a data-geek, a number-hungry, 'what-if' scenario loving, chart-producing keyboard pusher. I laughed at myself as I did it. “Oh pooh, what do I think I'm going to find here?? I don't spend THAT much cash…”

It was revolutionary.

That week alone, I found that I spent almost ten bucks on the vending machine at work. I spent $60 on eating out, breakfast and lunch (coffee + scone breakfast, <insert horrid little buffet-style salmonella-on-the-hoof place here> lunch). I spent (brace yourself, this hurts LBYMs eyeballs) almost $400 on 'dining', wherein the DH and I hit up the local restaurants for dinner. One week. $400. I also spent about $250 at Safeway – why? For heaven's sake, what was I buying at Safeway for $250, when I'd already spent nearly $500 on food? If you had asked me to guess, I would have said we spent about $250 a week on food. Sure, at Safeway! But…how about Chevy's, and Lyon's, and the various pubs where we would sit in on sessions (and buy a few beers, and maybe some dinner) and…

I took a month and tracked our spending, right down to the penny. I bought Quicken, and spent a long weekend inputting all our stuff. I built a filing system and began actually filing things in an organized fashion instead of shoving everything into a drawer more or less in chronological order. My Palm Pilot got a heckuva workout.

Then I sat down, took the actual numbers, and I built a new budget, based on actual spend. I eliminated all of our entertainment related things, all our eating out and buying books and so forth and so on. I stared at the grocery budget, took 25% off the figure and plugged it in.

I ran through the debt analyzer on Quicken, including the little video presentation. This was the first time I ever heard the snowball method described, and it seemed to make sense to me. I reorganized our debts, this time putting them into descending order by interest rate, shocked to discover how many were vying for that number one slot at 24%. I showed the DH the pretty charts and graphs showing our net worth (somewhere around the ninth ring of Dante's Inferno) and debt payoff horizon (somewhere around 2146 at our current rate) and approximately retirement date (he'd've been older than Methuselah at that point), and for the first time I think it clicked with him. He still took a complete 'hands off' approach to our finances, but for the first time he began to give the whole thing some level of importance in his life. He took all the cards out of his wallet (too bad I didn't!), and started just getting a cash allowance from me every week.

It worked. The financial ship began to put itself on an even keel. We stopped overdrawing our checking account. We stopped bumping the credit limits on our cards. I very quickly slipped some entertainment money back into the budget – we would only be able to go so long without 'doing something' before the emotional buildup would get a bit much for us. And when we blew, we blew big time. Five, six hundred bucks on a single purchase, a single mini vacation or 'but I really waaaaaaaaannniit!' item. Letting off a little steam in even increments seemed to take care of the problem. One night out for a modest dinner and movie could hold us for two weeks, especially if we had the next one to look forward to. Hey, we're working on it, but we're still pretty thoroughly spoiled brats.

There was one small problem, though. Even having cut out 'everything', we still had almost nothing left over. Even squishing things down, we were still charging too much. We still had too many 'emergencies', too many 'necessities' too many 'oh this once won't hurt' expenses. I carried the cards in my purse, and kept whipping them out any time the going got tough or I was worried that I might overdraw my checking account. After all, charging $20 wasn't that bad, I'd just sent them $200, right? The debt reduction was going so slowly as to appear to stand still. Sure, we could make the payments, but what we couldn't seem to make was headway. And it would be three years before a car payment would be done; way more than that before a credit card would be eliminated.

Moreover, we had no savings – nothing for either immediate emergencies or future plans. We had some money in the husband's 401k plan, accidentally – the plan had defaulted to taking a percentage of his pay, otherwise we wouldn't have had even that. We had absolutely nothing else in terms of savings. We had a checking account that was just barely this side of the black most of the time.

Our first child was due in early Spring.

We had to do something else. We were managing to live WITHIN our means, we were managing to keep the checking account in the black – but we had no buffer. We had no extra. Any emergency, real or fabricated, dropped us back into the red again. We were not getting ahead at all. Treading water, at best. Sinking slower at worst.

And… our first child was due in early Spring.

It was time to get serious. It was time to get medieval. It was time to look for new ways to spend even less…

…to try…

NEXT: Vat ees theees, how you say, FROO-GAHL-EE-TEE?

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