I think Dory’s “Just Keep Swimming” is going to be my motto for 2012. It’s not even the middle of January and I’m already feeling discouraged about our 2012 Financial Goals. Yesterday, I was going over our plan to pay down all of our debt this year and found a huge error. Big. Like $16,000 big. How on earth did I screw up that bad in my calculations? I’m beating myself up for two reasons–one, because I consider myself smart but obviously did not add or subtract correctly–and two, because mentally I’m geared up, ready to be debt-free by the end of the year and this is a huge obstacle.

Right now my mind is reeling with thoughts:

• It’s impossible. Don’t even try. Just stretch it out another 6 or 8 months into 2013. (hate this option)
• You can do this. Just earn $1500 a month and still be done in December. (seems impossible–how to find a job, work while maintaining family life, etc.)
• We need to cut more, and spend even less. (not sure how, plus hubby doesn’t like this option)
• This whole thing is stupid. What’s the point of eating beans & rice and sacrificing if you can’t reach the goal. Just go spend some money and make yourself feel better.

Yesterday I was anxious and frustrated. Today I’m going to get through the rest of my day and try not to worry about it. This weekend we’ll look at it with fresh eyes and come up with a plan.

What do you do when you need to just keep swimming?

Image from keep-calm-and-tumblr.com

This week, I’m writing all about the fiascos of Verizon, Bank of America and Netflix over at Savings.com. Did you know how much power you have as a consumer? I share four ways I wield my consumer power, and you should too!

 
If you have similar experiences with stores and companies, please share them in the Comments on that post.

Writing our 2012 financial goals was surprisingly easy for my husband and I this year. We are the most “on the same page” as we’ve ever been, both of us with our heads down running as fast as we can towards being debt-free. As I showed you a few days ago, our 2011 financial goals mostly failed, but only because we changed halfway through the year from being reactive to proactive. This year is all about power. WE have the power to pay off our debt. WE have the power to increase how much we pay off by living even more frugally and by me earning extra money wherever I can. WE have power over our money, not the other way around (as we’ve lived for the past 18 years).

I am so excited about 2012.

Last night, we reviewed all of our debts and wrote out these financial goals. This Friday, we have another date planned to go through our monthly budget with all the changes (electric & water have gone up, his transportation subsidy was drastically reduced, some of our medical costs have increased, etc.). We’ll budget our monthly income and put a name on every penny, so that everything else goes towards the debt. Here’s the plan:

1) Pay off our second mortgage by February 20th.

This is the momentum that pushed the whole debt-free train forward. Once this is paid off, we will no longer be upside-down on our house, and we can refinance (see below). This is where we’ve pushed all our extra money in the last four months of 2011, and we are so close to paying it off.

2) Refinance our mortgage by the end of March.

Our current mortgage is at 7.375%, which is horrendous, but we have not been able to re-fi. With #1 complete, we finally can! With current rates at 3-4%, we’ll see a significant savings, plus we plan to re-fi to a 15-year fixed loan. This will make our monthly mortgage payment a few hundred dollars more than we’re paying now, which we can easily afford once #1 is done.

 3) Continue the Debt Payoff towards our three remaining debts–HVAC, student loans, and van–and pay off by the end of December.

We’ve prioritized these three debts based on their interest rate (not based on the amount, as suggested by Dave Ramsey). The only reason there’s any van loan left to pay off is because it’s been sitting there at 0% and not due until mid-2013, so we’ve just ignored it. We just took on the HVAC loan a few weeks ago, and it’s also at 0%, though temporarily. We want that paid off before it shoots up to 24%, and the remaining student loan is at 2.25%. We can do this!

That’s it–three simple (but not easy) goals. We actually know what we’re doing for 2013 already because once all the debt is gone we’ll go back to the 7 Baby Steps. It feels so good to have a plan, and it feels even better to be working as a team. Even our kids are on board; they know there’s no big vacation this year, and they understand that we’ll all be rewarded in the future with discretionary income once again. Here’s to a successful 2012!

Interesting year! We weathered the continual threats of government shutdowns (and absent paycheck for our one-income family), a FEMA insurance fiasco and a new financial struggle just two weeks ago (our HVAC system went kaput, giving us a new BIG debt for the pile). Somehow, I’ve come out of it with renewed energy and excitement about our financial goals. While I was frustrated with the timing of the HVAC thing, because we have a debt payoff plan in place (and on paper), I knew how we’d handle it. It only changes our plan for debt payoff (other than the house) by two months this year; look for more details in my 2012 Financial Goals post later this week.

Here’s the final review of the 2011 Financial Goals I shared with you during the year:

1) Pay off one whole debt {NO}

We’ve ignored this debt all year; since it’s a small amount sitting at 0% interest, we’re ignoring Dave Ramsey’s suggestion to pay it off first and putting our money towards #4 below.

2) Increase our Emergency Fund  {NO}

Once we saw there was no government shutdown in December, we sent another large payment to #4 so we could keep on track to pay it off by February. Our emergency fund is quite small now, but we have several thousand and a backup plan in case anything “emergency” happens between now and the debt payoff.

3) Contribute to a retirement plan  {NO}

We’re still doing the minimum at my husband’s government plan and will increase this as soon as our debt is gone. This has been pushed off two more months because of the HVAC replacement, so it will be first or second on the list for 2013.

4) Pay down our second mortgage  {YES!!}

This has been our BIG GOAL, and we’re still on track to pay it off in February. Once it’s gone, we can re-finance our regular mortgage to a 15-year fixed, dropping the current 7.375% interest rate to 3.5% or so. It will reduce our monthly payment and allow us to put more towards debt payoff. More details later this week.

5) Pay for two family vacations (using the “extra” 2 bi-weekly paychecks) {YES}

Done. And I still don’t regret it. We needed to take a fun trip (Disney) and a family trip (reunion), and since we’ve already explained to the kids that there will be NO vacation in 2012, at least they have their memories of these two trips to enjoy. They know that we can take another vacation once all the debt is paid, and that it will be a big celebration to do so.

Looks like while we’ve avoided a government shutdown this quarter, the payroll tax cut is ending, resulting in a 2% increase in social security tax starting January 1st. For many families, this is $20+ less per week. I have some suggestions for ways to “find” that missing money next year over at Savings.com today with 4 Tactics to Offset the End of the Payroll Tax Cut in 2012. Are you affected by the increase? Tell us in the comments on that post. Thanks!

The big banks. The new fees. Ugh. It’s been all over the news, and it’s finally trickled down to little-ol’-me. My bank notified me that my small checking account (the one I use for business) will now have a $15/month fee because my balance isn’t high enough. I only have this account to keep my blog earnings separate from my family’s main bank account, like I did when I did direct sales. I’m a full-time mom working not-even-part-time hours, so it’s never going to have much of a balance! What to do?

It’s a movement, I know, but I’m just doing it to save myself that $15/month. I did a little research on fee-free checking accounts and ended up opening an Electric Orange Checking Account from ING Direct. It’s perfect for a mom with a small side business, since I never need checks (but they do offer them if you do). I rarely spend money, just a few Paypal transactions here and there and a few store purchases for supplies. I’ll be able to link up my Paypal account, my affiliates and other sources of income, and I’ll receive a debit card for those occasional in-store purchases. I can even get cash at ATMs all over town, if needed. It’s completely fee-free, no charges at all, with no minimum balance requirement (yay!).

I’m even going to make $50 on this move. When you make 3 signature-based transactions or Person2Person Payments with your Electric Orange Debit Card in the first 45 days, you’ll get a $50 bonus deposited into your account. Signature-based just means that you run the card as credit rather than debit, such as when I’m at Staples buying supplies for my upcoming coupon class. Learn about Person2Person Payments and more at ING Direct.

For now, I’m leaving our family bank account alone, but I’m keeping a close eye out for notifications about fees and other changes. I’m already researching credit unions and other fee-free options in case we decide to move.

 

I’m overdue with an update on our 2011 Financial Goals because a lot has been happening. We’d been off-track earlier in the year between our FEMA fiasco and the repeated threats of a government shutdown. In September, I was feeling very discouraged, so I re-read Dave Ramsey’s Total Money Makeover and used an online calculator to lay out a plan showing exactly how to get our debt paid off to reach our goals. That renewed our energy, and now we’re firmly back in the Debt Snowball phase of the 7 Baby Steps. We’re definitely feeling the pinch going into these last months of the year, but we’re determined and focused, with a light at the end of the tunnel that makes it worth it. We told the kids we would have a small celebration in February once our biggest debt is paid off.

With all that in mind, here’s where we stand on the goals we made at the beginning of the year:

1) Pay off one whole debt
While Dave’s plan suggests paying the smallest debt first, we’re ignoring this on purpose. It’s a small amount sitting there at 0%, so we’re going to complete #4 below first, then pay this off in the following month.

2) Increase our Emergency Fund
We did this, and now have 5 months of living expenses socked away, but it’s upside down from the order of the 7 Baby Steps. We feel we need to keep it on hand in case there actually is a government shutdown (the next possible date is November 18), but if we applied it to debt we’d be almost done!

3) Contribute to a retirement plan
We’re currently doing the minimum at my husband’s government plan and will increase this next year once our debt is gone. With a solid plan in place, we can turn our debt repayment dollars into retirement savings sooner.

4) Pay down our second mortgage
This is our BIG GOAL. With all the cuts we’ve made, money I’m bringing in, etc. we’re paying every penny we can towards this, and it should be paid off by February. Then, we’ll be able to re-fi our regular mortgage and apply everything over that to any leftover debt. Things will move a lot faster then, which is why we’re pushing so hard right now!

5) Pay for two family vacations (using the “extra” 2 bi-weekly paychecks)
Occasionally I wonder if it was a mistake to take these trips when we could have paid the money towards our debt. No, it was not a mistake. We needed to see our family at the family reunion, and we needed our first family vacation. That set us up for reaching our goal next year, because we can’t plan the next trip until we’re done with the Debt Snowball, and that is very motivating. In my own defense, I budgeted the two “extra” paychecks for the year for these two family trips, and we managed to come in $1400 under budget overall. That overage went straight towards debt repayment.