And boy am I ever paying for it.

One of the fun bits about living in a new construction project (especially one that’s built during a construction boom and labour shortage) is the delays in setting up and billing for basic services. Like electricity.

We moved in January 5th. We had power the whole time, but they didn’t get around to installing individual meters until July 18th. They were tracking power usage from that point, but didn’t manage to bill for it until the December 4th billing cycle. Our bill for that period was pretty average – about $40/month for late summer and fall. It is a little more than I’m used to paying (past bills for similar-sized places were around $30-$35/month), but not drastically.

Unfortunately, the brilliant stars at BC Hydro, despite our repeated calls to ensure our account was set-up/transferred properly, were still unable to get our address correct until two days ago. They’d been sending the December bill to our old address. The bills for our new place were going to the place with the account we had already closed where someone else is already paying for power, despite having us on record as living at the new address, which is also the place the power they’re billing for is being consumed.

The vast ineptitude of crown corporations never fails to impress me.

Anyhow, they finally sorted out the billing thing (after charging us $2.88 in “late payments” for their mistake) and our bill came in the mail yesterday. Except now it includes the December 4 – February 4th billing period.

I opened it and nearly shat myself.

We’d managed to use nearly as much power in the last two months as the entire 4.5 months before that.

I blame winter, and the fact that we’re now in a corner, instead of middle apartment, with a LOT more windows.

But it’s really just a huge FUCK YOU from the world that I didn’t really feel we needed at the moment.

We live in a brand new place, with (allegedly) highly-rated windows and insulation and brand new Energy Star appliances. We’ve taken the extra steps of installing programmable thermostats, and replacing as many lightbulbs as we can with compact fluorescent bulbs (unfortunately some form-factors are hard to get our hands on, like dimmable chandelier torchiere lights). We used LED Christmas lights.

We aren’t intensely vigilant about power consumption – we haven’t tried to rig up any sort of solar or wind generators, but we are absolutely conscious about it.

We don’t leave every light in the house burning day and night. We turn off lights in rooms we’re not in. We don’t leave idle appliances plugged in. We don’t turn the heat up to sauna-like temperatures.

This is one of those “emergency” expenses that we’re going to have to pull out of our savings account to meet. I just don’t have an extra $400 around to hand over to the power company. And it absolutely chaps my ass. I’m now in a serious funk about not being able to make it on our plan. There were already the taxes in January, which I was hoping would be the end of it. We’re now only a few days into February and already have the power bill fiasco. What kind of assholery will the universe deliver in March?

I’m also sortof at a loss about what we can do to reduce our next hydro bill. Other than learning to love candles and sweaters more than I already do – what else is there?

Neil and I made it through January, the first of 12 months in which we’re aiming to eat, drink and be merry on $1000/month in order to be free of our consumer debt by the end of 2009.

So, how’d we do?

Biggest Win: Sticking awfully close to our goal this month, which is MUCH closer than we’ve come, ever, to sticking to a budget & plan. I see this as a win, though Neil’s not so convinced. He’s still frustrated by our…

Biggest Fail: Receiving our un-budgeted-for property tax bill. Part of the perils of becoming a first-time taxpayer in a city in a new development – you never really know when these things will arrive and how much they will be when they do. I mean, we had some idea, but still weren’t adequately prepared for it.

Between this and clearing the last of the Christmas expenses off the Visa (Vendors who take THREE WEEKS to post charges? Seriously – take my damn money already and quit messing with my accounting.) we are basically in the same place we were when the year started, with the addition of a bit of money in our savings account. Whether those savings should really be there or be used to pay off debts, from an accounting perspective, is probably debatable. But it makes me feel better to have a little something socked away, so there it will stay, and we’ll keep plugging away on the rest of the plan in the meantime.

And now, the numbers:

Debt paid down for January: $2161.12

Amount left to go: $20,480

Discretionary spending for the month: $1040. That last $40 was a bit unexpected, and we actually spent it on the last days of the month and borrowed it from February. We’d ended up very near our favourite bulk food store in Richmond, and borrowing from February meant we would save ourselves the cost of a car trip in a few weeks.

Lessons Learned: The first half of the month seemed to go really smoothly, since we took out our $500 and cruised through, spending it by the 15th. The problem arose when we realized we had more expenses in the last half of the month than we’d initially thought, and we struggled to get through, especially the last week. We dove into our already established change jar for $10 for milk & eggs, and were grateful many times over for our well-stocked pantry and freezer. For February, we’ve tried to plan our $1000 with a whole-month view to allocate our funds better.

Another lesson happened as Neil and I were discussing how we felt about the month and how we did. I’ve already said I feel pretty good. Yes, we had an unexpected expense, but I think it’s more important that we paid off more than the amount of debt we’d planned on this month, and lived very close to our monthly spending goal.

This just goes to show that, as much as our goals are aligned for what we want to achieve regarding to money, Neil and I think of it in very different ways. Like most couples, it’s the number one thing we argue about – and it really comes down to wanting to achieve the same thing, but in the way that makes sense to us.

I am the spender in the relationship. I enjoy acquiring new things. They don’t have to be big or expensive – but having the luxury of buying a new lipstick or item of clothing when I want it, or even a small bouquet of flowers to have on the table, is important to me. This month was a big one in terms of learning to be happy with the trade-offs I’m making in order to stay on budget. The net result is that I acquired less and was happier with the things I did buy. That’s a big win for me.

Neil, however, is the saver. But his compulsive need to be debt free often ends up costing us more money, as evidenced by the number of cheques we bounce because he’s taken every penny in the account and transferred it to our line of credit, forgetting about pre-authorized payments still to come out. So for him, the unexpected tax bill has seriously harshed his buzz, because it’s yet another in a long string of months where an unexpected debit has come up and set us back again.

I’m just trying to stick to the plan and be optimistic that for February, we really have though of everything, and will remain able to stick with the plan and start making some real progress on this debt paydown.

(I’m re-reading this and it sounds very much like Neil is the realist, and I’m a bit of a delusional Pollyanna – what good is it to stick to a plan that doesn’t actually result in progress? I don’t know how to answer that, other than I need to feel like I made some progress, or I’m going to give up very quickly – anyone have any suggestions for me?)

How about you? Are you a spender or a saver, and what do you think about our progress so far?

I’ve spent a few months now living in the Land of Responsible Choices, and really, since I rescinded my citizenship to the Land of AND, I haven’t had to face any choices that I’ve found particularly tough to work through.

Until now.

I am not going to Germany.

I’m sure many of you are now asking “but Jen, I have heard nothing about this, why on earth would you have considered going to Germany in February?”

Believe me, it’s not my ideal winter vacation. But Neil is going for work, and he happens to be going to a city in Germany that is a 20-minute drive from where the majority of my maternal relatives live in the Netherlands. With his airfare, hotel and per diem covered, we would only have to cover my flight and any extra meals & excursions we would take.

When we lived in the Land of AND, this is one of those instances where we’d add “just a bit more” to our Line of Credit, and “take care of the balance next month.” And conveniently forget about all the other times we’ve done just that, and the large amount we need to pay off already.

I’d drain our newly formed savings account for the plane ticket (funny, nobody flies the cheap charters to Europe in the middle of winter), and we’d put those pesky extra excursion costs on the Visa. While we wouldn’t put ourselves into danger of missing our mortgage payment or anything, it would not follow our newly set budget and goals.

Now, living in the Land of Responsible Choices, we’ve realized that while it would be a good opportunity if we were debt-free, it’s not a good opportunity if it derails our ability to be debt-free by the end of the year. Which it would. So I stay home.

And I say this all very matter-of-factly, but in actuality, I’m highly disappointed. It’s never easy to have to cancel something out that you’ve pumped yourself up about and started planning for. I’m working very hard on convincing myself that I’ll be okay with this.

I’m consoling myself by remembering this means I’ll be in town to go to Northern Voice, which I’ve missed the past couple years. And we’ll still be on-track to pay off our debt, after which time we’ll have the financial freedom to go to Germany pretty much whenever we want (preferably when it’s not the bleak midwinter).

But in the meantime, if any of you are around the last week of February and first week of March, and want to take some time to cheer me up and keep me company while I’m flying solo, the distraction (and perhaps some praise of how virtuous I’m being in my responsibility) would be very welcome!

We’re talking “broke,” “poor” and “choice” here gentle readers. Get your minds out of the gutter now.

Anyhow, I hate the words broke and poor. Unless you’re using the word to describe a lack of funds that is impacting one’s ability to provide food, shelter and safety, I find using those words insulting to people who are truly down on their luck and unable to provide for themselves. Being broke or poor is a serious issue.

I also find that using the word broke or poor to imply a lack of discretionary funds really distances us from the personal responsibility we should all have around our finances.

Because you are not broke. You are not poor. You have made a choice. And there is no reason to hide that.

It’s easy to say “I can’t go [insert thing that costs money here] because I’m broke/poor right now.” But usually what we mean when saying that is “I have allocated all my discretionary funds for this week/month/whatever, and I do not want to change that to [thing that costs money] with you.”

And that is hard.

Because in this world of spend, spend, spend and showing how much you value others by spending money on or with them, it’s easy to feel that by saying “I choose not to spend money on/with you” you are really saying “I do not choose you.”

But it doesn’t have to be that way.

Limiting the funds we’re spending on discretionary things, choosing to spend the majority of our income creating personal fiscal solvency is something we’re proud of. We shouldn’t have to hide behind the words “broke” and “poor” as if they are things that just happened to us one day, that we can’t control. We made choices that got us where we are, and we are making choices that will get us where we want to be.

So one of the challenges I’m working through, that I’ll extend to all of you, is to stop hiding behind the words “broke” and “poor” and start being more honest with yourselves and your loved ones. When someone asks you to join them for an event or activity that doesn’t fit into your budget, be honest with them and yourself and say “sorry, that doesn’t fit into my budget right now” – and if you truly want to spend time with them, offer a free/cheap/delayed alternative.

Instead of a restaurant dinner, suggest a dinner party at home. A night in instead of a night out. Or just say it doesn’t fit into the budget this month, but let’s set a date next month when we’ll be able to plan our budget better around it.

Choose responsiblity. Choose to show your loved ones you value them in ways that aren’t tied to money. Choose to wear your choices proudly!

For as long as you actually have enough resources to be able to make those choices, you are rich.

In coming up with our budget, we tried a ton of different systems to capture and manage the money in and the money out of our accounts. We’ve used financial planning software, complicated spreadsheets, online banking tools – and none of them worked.

Despite the alleged “real-time” nature of online banking today, things don’t exactly work out that way. Visa transactions take days to post. Withdrawls we authorized for the 1st of the month didn’t come out until the 9th, or even 12th sometimes. Post-dated cheques took up to 2 weeks to clear our account.

And every single month, no matter how hard we tried to keep good records of all these things, we’d miss something and end up back in the red again.

But we have finally found something that works, even when (especially when) the electronic banking systems don’t quite jibe: Cash.

I was really always trying to aim for this; Neil was a tough sell.

But if you’ve ever read any financial planning books or seen any shows (Till Debt Do Us Part comes to mind), the person who’s trying to manage his or her finances is always put on a cash only spending plan, at least for discretionary purchaes. And there’s a reason why: it works.

Every payday (twice a month) we take out $500 to keep in a jar for all of the month’s food, entertainment, clothing & personal care needs. If we know we have a gifting occasion coming up, or want to go out, or buy clothes or something for the house, or just need one of those rare but expensive purchases like another giant sac of dog food, we count out that money and paperclip it to a note so we don’t accidentally spend it before it gets used for what we need.

It’s also powerful to see where we’re spending money, and good for adjusting our expectations. Like when we took out our $500 on the 15th of January we thought with that money we could go out for a few dinners, buy dog food and get some shelves we’ve been eyeing at IKEA. After we did a week’s worth of grocery shopping, we realized the futility of our plan. It would’ve left us $8.27 for the remainder of January (including food for the last week). We wouldn’t have starved, since our larder is fortunately well-stocked, but it seemed a little ridiculous to struggle through the final 10 days of the month all for a shelf.

So we put aside half the money for the shelf in January, and the other half will come out of February (when we’ll buy the shelf), and that will be much more reasonable for the rest of January, and we won’t have to live on beans & rice for the rest of the month.

Revelations at every turn, I tell ya!

The rest of our expenses we manage with a simple checklist that we print out for each month that sits on our desk. When automatic withdrawls come out, or transfers happen to other accounts, or we pay bills online, we tick them off as having happened. That way we know everything that’s supposed to be occurring on our accounts is (and things that aren’t supposed to be occurring, aren’t).

It took us going through about 6 months of expenses to find exactly what our fixed expenses are and when they come out, so we don’t get blindsided by something silly that we’ve forgotten about. Because, oh boy, do we ever forget about things. Like our life insurance. It’s about $35/month, comes out on a really strange day (the 21st or something) and guess how many times in the past year that payment hasn’t cleared, because we forgot about it, drained the bank account, and we got dinged with an NSF fee? At least three. For a stupid $35 pre-authorized withdrawl.

This is another area the cash helps a huge amount with, because it keeps us from fiddling about with the contents of our accounts multiple times a month (which one of us is very fond of doing), and potentially over-contributing to the debt repayment accounts at the expense of missing other payments that we’ve forgotten were still coming *cough*Neil*cough*. So the checklist is a backup for that.

And I have to say, so far so good. Unless we manage to do something entirely boneheaded, it looks like we’ll make it through the first month of 2009 with our “spend $1000 on discretionary expenses” goal intact. And that feels pretty good.

Do you have a budget? How do you stick to it?

It took a lot of tweaking to get us to the budget we have now. When we looked at our budget, we found we actually have very few costs that we don’t have the power to increase or decrease by significant amounts each month. In fact, there are three:

1. Home (Mortgage, Strata fees, Taxes)
2. Student Loans
3. Interest owing on our Line of Credit (where that $20k is sitting)

Everything else is negotiable. Since we car-share instead of owning a car, if we drive less we pay less. We could eat out every meal, or we could eat nothing but beans and rice. We could pay for monthly transit passes, or see if we could bike more. We could buy designer duds or off the discount rack. We could change (or cancel) gym memberships, dog care services, cell phone plans, cable & internet package.

So the hardest, but most important part, was finding out how much we could cut our expenses to be as effective as possible at paying off our debt, but not so far that we’d feel so deprived and end up setting ourselves up for failure (and a big “I give up!” splurge!).

After a few months of really looking at how much we were spending on things, what we feel are our needs, wants, and sanity savers (those things that are technically “wants” but their true value comes from keeping us in a sane place so we don’t blow our budget on other things) are, we managed to form a budget around those.

So things that stay in the budget, along with our fixed expenses, are:

And that left us with a tidy chunk left over for “everything else.”

We looked at that chunk, and said to ourselves “Selves, if we can take most of that chunk and put it toward the line of credit, we could pay off that line of credit by the end of the year. But can we live on the rest of the chunk?”

So we tried it. And after many months of failing to do that, we have finally nailed it.

Our chunk of the chunk is $1500/month.

Of that, $500 goes straight into a savings account for emergencies (because, like so many others with consumer debt, we just don’t have one).

The remaining $1000 covers our groceries, dining out, dog food & vet appointments, entertainment, clothing, personal care, household goods, gifts, leisure pursuits, events and basically anything else we do that I haven’t already mentioned.

I’m actually embarrassed to admit that for so long we really struggled to spend under $1000 on those things in any given month (and for the couple years before that, we didn’t even aim for it – we just did what we wanted). It would be so much to so many. And I remember not so long ago when I was a student and living on well under that.

But it is what it is. It’s an amount that means we can easily cover feeding, clothing and caring for ourselves in a manner that we’re comfortable with, and we still have room for a few little luxuries, like the occasional Starbucks (which is now a Tall Americano Misto instead of a Grande Soy Chai Latte).

We can, in addition to that, have a couple or three meals out a month. Or buy some new clothes. Or go to a hockey game. Or go skiing. Or to the spa. The key here being OR not AND. We used to live in the land of AND. Now we live in the land of responsible choices.

I know, feel free to tell me what idiots we are (actually, please don’t, we are aware and it’s just not good manners).

The point of this all is really to come clean, to put it out there, and perhaps find that there are some of you out there who have (or maybe still do) live the same way. Live in the Land of AND. And talk about what it’s like to move past that, and maybe some lessons learned on the way.

In the next post, I’ll tell you about how we deal with the accounting.

The start of a new year is when a lot of people resolve to get their financial houses in order. And we can certainly be counted among them.

Not that we’re just tackling this now. Over the past few months we’ve been working on sorting out our exact financial situation and trying out different budgeting strategies to figure out what we can stick with for the next year.

Our goal: eliminate all consumer debt by the end of 2009.

I debated a lot in my head about sharing hard numbers here on the internets. Finances are an inherently personal thing, and everyone has their own idea of what is a little, or a lot, or anything in between. Eventually I figured out what I’m comfortable sharing, and had a chat with Neil to make sure he’s on the same page.

In the end, I decided that sharing real numbers makes this all more real – both to you, gentle readers, and to me, since I’m partly using this year of blogging the budget to keep me accountable while I share what works for us, and any tricks and tips we learn along the way. I’m not going to go posting our bank records or anything, but a few numbers are key here.

Let’s start with the big one: Twenty Thousand Dollars. That’s what we started 2009 owing in consumer debt.

We haven’t actually added to that in the last 6 months or so. A lot of it is from old credit cards that had carried balances for too long, some is from wedding expenses, and a big chunk is from moving expenses a year ago. There is no “one big thing” we can point at as the root of the debt, and that’s part of the problem. It was always something we figured we could easily take care of in the next month or two. And then didn’t. Until we consolidated all of those lingering accounts and came out with the somewhat heart-stopping number above.

We’ve been saving up and paying cash for most everything we’ve bought since the wedding, kept up just fine with our other bills, but haven’t been so good at making any sort of substantial progress in paying down that existing debt.

Until now – and we’re going to do it by the end of the calendar year.

So now we’re paying down that debt first every month (a no-brainer, but surprisingly hard to realize sometimes) and our other fixed expenses, then only spending what’s truly left for discretionary things.

And how did we figure out what’s left? That’s for the next post.