Paying the Stupid Tax

When you’re young and “in love” you do really stupid things. Remember Mr Hive? Surely you do. He was the unmotivated, un-applied fellow I dated a few years ago. (Wow – has it really been that long?)

I mention in this post about how his car was dead and how I was tempted to co-sign for him on a new car. To quote me:

I’m so tempted to volunteer to co-sign for him (I’ve done this for other BFs in the past with no issue), but I know that we shouldn’t get so financially involved so soon. But at the same time, as we go forward in our relationship I also know that him having the lowest interest rate possible will be the best thing for us financially. He thanked me for having his best interest at heart when we went to a dealership last night. And of course my response was, “You’re welcome, but it also benefits me as well as we move forward in our relationship.”

You know where this is going right? RIGHT?

Yeah, one of those things that I decided NOT to mention on my blog because I was completely ashamed of it was that I did in fact decide to co-sign for him. Not only that but he chose a BRAND NEW car as the car he purchased.

Well, not more than a few months after that transaction happened (6 to be exact), I broke up with Mr Hive.

Since then it has been a complete battle. I have emailed him repeatedly to ask him to confirm that he is making his payments. The car loan, of course, shows up on my credit sheet as if it were mine.

He hasn’t missed a payment since we broke up, but having absolutely no control over when he pays, if he pays, or even knowing if that month he will be late has taken a huge hit on my sanity. Some nights I lay awake wondering what I will do about it.

(In the worst of these moments I imagine myself going in to his apartment [he lives with my future brother-in-law as luck may have it], taking his spare key, taking the car and selling it since I’m on the title. Mr Woodpecker and I still have this reserved as a back up plan.) 😉

As Mr Woodpecker and I move closer to beginning our lives together, I want this whole ordeal with the car and Mr Hive to be over. Once and for all. So I emailed him again and encouraged him to refinance the car.

During this time, Mr Woodpecker and I have had some serious conversations about what is peace of mind worth to us. We finally came to the realization that peace of mind is worth a whole lot. We decided that if Mr Hive didn’t take any action to refinance the loan we were willing to pay him to do so. We decided that if he did not do anything, we would sit down with him and  propose that if he refinances or trades-in his car and subsequently shows proof that the old lien is paid off, that we would help pay for the down payment on the new car or pay for the difference in value between the old loan and the refinancing. We decided that it was worth to us up to at least $2,000.  That’s right, we decided we would give my ex-boyfriend up to $2,000 to get the **** out of our lives for good.

Thankfully it looks like this reminder has given him enough motivation to actually do something about the loan. He has apparently applied for refinancing at a local bank, hopefully that will get approved. And we won’t have to pay anything for it.

I wish, truly wish, that someone had sat me down when I was thinking of doing this and told me how dumb of an idea co-signing was.

I felt like I was doing my then bf a huge favor (which I was). I felt like we were going to move forward together (which we didn’t). I didn’t think that he would turn out to be as much of a liability to my future happiness and security (which he beyond a doubt is).

There were even days that I have thought “why don’t I just pay the car off for him so I don’t have to worry about this anymore.” And if the loan had been less than $10,000 it may have happened.

So listen… please, please listen. Don’t co-sign for a loan for someone. Just don’t. I know it feels like you should because they need you. There is a reason the bank won’t finance them. A really good reason. And you don’t want to have 5 years of financing hanging over your head after you cut ties in a relationship.

I’m paying the stupid tax, but at least I’ve learned my lesson!

Engagement Photos!

I still am partial to my anonymity, but I thought I share  a few of my photos that are less “revealing”. =)

The photographer did an amazing job and I just love the photos so much.

Obligatory 2013 Goal Post

Mr. Woodpecker and I sat down yesterday and made our goals for the 2013 year. We’re very excited about accomplishing these goals in the next 12 months (or at least making significant progress on them).

  1. Pay off credit card debt by April 30th, 2013. This is going pretty well so far, we have about $8,500 more to go. We’ll definitely be half way there by the end of this month. This goal will have to be accomplished before we can do the rest of the goals. Step in the next 48 hours: Worked at Kohls and paid almost $600 off within 2 days of making the goal.
  2. Have wedding with family present completely debt free. We want a debt free wedding. And a kick ass honeymoon (see step #5). I think we’ve finally reached a decision about our wedding: Cancun wedding at an all-inclusive. The ceremony is free, the reception is free. All we’ll have to pay for is airfare, room, and photography. It is more expensive for our guests, but it is more affordable for us. And we’re giving everyone we want an “out” with the option to celebrate with us at our pot-luck reception at our house afterwards. Step in the next 48 hours: Contact the all-inclusive to see about reserving a date.
  3. Build fence for backyard (debt free). We want to put a fence in the backyard for the dogs. This has always been the thing that we wanted to do as our first “home project”.  Step in the next 48 hours: Looking in to doggy door options online, since we already have the fence guy we want to use and an approximate cost ($1,500).
  4. Set up 10% of both our incomes going to retirement, set up wills, make sure beneficiaries on retirement and life insurance are updated, make sure amounts on life insurance are appropriate. I feel like since we’re getting married this is pretty obvious that we need to do this.  Step in the next 48 hours: Find ourselves a marital attorney for wills, discuss pre-nups, etc. Contact financial adviser to set up meeting (free service provided by my employer).  Retirement and life insurance above our work minimums will be set up after goal #1.
  5. Go on kick ass vacation (A.K.A. – a honeymoon) debt free. See comments on goal #2. We’re doing this!

December Reading

One of the things I just don’t have time to do when school is in session is pleasure reading. This December my book choices have been mainly non-fiction. Mostly about money (and a little on weddings). Here’s what I’ve been reading so far this winter break:

1. A Practical Wedding by Meg Keene

I knew that planning for a wedding could lead to me being insane. Paralyzed by choices. Bridezilla-type attitude. So I checked this book out from the library to get some practical advice about not going crazy with wedding stuff. After I finished the book (on the plane ride back from Vegas), I decided that there are only a few things that are important to me for the wedding:

  • A party with all of my family and Mr Woodpecker’s family.
  • Amazing photography.
  • Financially responsible.

That’s it. So for now Mr Woodpecker and I have decided to follow the advice of the many readers who are able to look at this objectively, and we’ve decided to postpone ANY wedding planning until after the credit card debt is paid off. We still have a general date in mind, and it may be that the wedding is more “thrown” together than detailed plans, but both of us just want to focus on one thing at a time. Debt first, then wedding.

2. Rich Dad, Poor Dad by Robert Kiyosaki

This book really kind of blew my mind, but in a way that it made me think about earning money very differently than I had before. It made me actually understand the difference between an asset and a liability and understand how rich people think differently than poor/middle class.

And I know this is probably not the conclusion that most people come to, but it also made me realize that I’m okay being middle class. I’m okay not being rich. I’m okay with not thinking out of the box. And I know that isn’t what the book was supposed to do and I’m definitely okay with applying some of the techniques to build assets, but it also made me realize that I just don’t care enough about money to be rich. And I’m just fine with that.

3. Smart Couples Finish Rich by David Bach

I read Bach’s book in about 4 hours. I loved it. Couldn’t put it down. I even took breaks after each chapter to talk with Mr Woodpecker about what I was reading and learning. The basics? Figure out what your values are and make sure that your spending aligns with your values. Mr Woodpecker and I sat down and made our list of personal values. I was actually really surprised by some of the things that were most important to him and it was great for me to communicate to him what I thought was important.

What really sold me on Bach’s book was his chapters on goals and on baskets. His three main “baskets” (or areas we should be saving money) are for retirement, security, and dreams.  The retirement makes sense, obviously. Security included things like health insurance, life insurance, wills, disability insurance, etc. Again, things that made sense but I definitely needed a reminder of how all of this fit in with the marriage I’m about to enter in to.

The dream basket really sent me through the roof. He instructed the reader to sit and dream and imagine about what they *really* want in life. To be outlandish and dream big. Then to share these dreams with your partner and figure out what the couples shared dreams would be. When I shared my two big dreams with Mr Woodpecker he loved them and even had similar ones of his own. So what are my 2 big dreams I’d like to work for?

a. I want to work and save enough so that some year Mr Woodpecker and I can travel for an entire year together around the world. Perhaps working online in the process or maybe we just quit our jobs for a year and just travel. Those details aren’t worked out, just the dream of being able to travel at our own pace around the world. Expensive? Yes. Doable? Absolutely.

b. I want to own a home on a decent size piece of land. One of my main values is “Peace of Mind”. And part of this peace of mind is knowing that if “anything” should happen I have the ability on what I own to sustain myself and my family for a moderate amount of time. This means I’d like to have an orchard, my own family garden with vegetables, and some chickens for eggs. I’d love to have some acres for kids to play on and build tire swings and tree forts. And perhaps a lake for the dogs to swim in. Oh yeah, and also, I’d like this piece of land to not be too far away from town. Good thing I live in Kansas where something like this is actually possible and not to unreasonably expensive.

 

So what’s next? What book recommendations do you have for me? I’m due to go to the library tomorrow and would love some great recommendations!

Trip to Vegas

Mr Woodpecker and I took a quick one night, two day trip to Las Vegas this past weekend to look at wedding venues. We decided that a $500 trip to Vegas to check things out might end up saving us money in the long run. This was DEFINITELY true!

Before going I figured we’d end up going with Caesar’s Palace. From the websites that was the venue I liked the most. After visiting about 10 different venues and talking to many consultants, we narrowed it down to two: Planet Hollywood and Cosmopolitan.

Planet Hollywood because it was the least expensive option to give us everything we wanted (we could do the wedding + reception of appetizers and drinks for around $5,000). The chapel there was pretty and they use the photographer we wanted.

Cosmopolitan because it is just perfect. Exactly what we wanted. But the price? Not exactly cheap. The wedding + reception of appetizers and drinks for around $7,500. They also use the photographer we wanted.

The two venues are not equal is quality or amenities offered.

Getting back home and the smell of Vegas dissipating from our clothing… well, we’re not sure. The Vegas wedding would be fun and beautiful. But do we really need to spend close to $10,000 when we include rings, dresses, travel, ceremony, reception, etc. And not even provide a full meal for our friends and family who have traveled to spend the day with us?

So now we’re considering using a chapel on his school campus ($400 for  3 hour reservation) and the reception at the restaurant that we had our first date at (~$3000 for a meal for 40 people). I don’t care about flowers and things like that, so I’ll probably just do an inexpensive bouquet and have that be it for flowers/decoration. I think we may even just skip the cake since neither of it really like it and just have everyone order dessert from the restaurant. I think we could do everything for $5,000 total and avoid the expensive of airfare AND provide a meal for everyone. Also, our family from out of town would get a chance to see our home which would be nice.

Then again, there is a lot of fun to be had in Vegas… and that could be awesome.

This is what happens when you don’t plan.

When Mr Woodpecker and I first got engaged we discussed the plans for the wedding. He wanted to get married after we got out of debt (should happen in around 4 months from now). I am totally on board with this plan.

I then brought up how we will save for the wedding expenses. Mr Woodpecker thought pretty strongly that we shouldn’t pay anything for the wedding expenses or save anything for the wedding until after we are out of debt.

While logical in a boy, single minded focus kind of way, it really isn’t practical.

For instance, we are leaving for 2 days next week to go to Vegas, look at venues, and take our engagement photos. All wedding related expenses. And little of it we have the money for since we didn’t start saving anything when we first got engaged.

We ended up paying for the airfare and hotel with money in our checking accounts, but for the engagement photos I had to secure the photographer – which meant a 50% deposit. Which meant money I didn’t have. So where did I turn? The trusty credit card. Money now, pay later.

This lead of course to me shopping for a dress for the engagement pictures – which led to me shopping for a dress for the wedding – which led to me finding the perfect dress. Which led to another $580 on the credit card. So BOOM – almost $800 of progress on the debt destroyed in a matter of a few days.

Then Mr Woodpecker had an emergency expense of $750 that had to be paid the very next day. We used his emergency fund for this. And now I’m just…grrr… angry and annoyed at how easily I slip back in to habits.

But it reminded me very clearly that if there is something that I know I’m going to spend money on THAT’S OKAY. I just need to PLAN for it.

So Mr Woodpecker and I sat down today and discussed it and I told him there was no way I won’t be able to spend money on the wedding until just the month or two before the wedding. That I was going to need to put down deposits and buy invitations and all of that stuff. So I can’t just have no budget. We need to set aside money now, each month, to pay for wedding stuff or I’m going to keep using the card.

He finally saw my point of view on it and we’re going to build our budget for the 15th assuming some money towards the wedding. Initially I’ll probably just use the majority of it to pay off the money I’ve already spent, but I do know that Save the Date cards will be the next big ticket item and perhaps even a down payment on a venue next week.

The wedding stuff is already stressful for me. I don’t like making decisions and feel like I constantly have to. Every day eloping just sounds better and better. Except I really, really, really want a party with all my family and his family together. So might as well make that the wedding, right?

Wedding Planning Drama

I’ve watched enough movies and television and had enough friends that I know that every wedding plan comes with a little bit of drama. But me, being a relatively drama-free person and my fiance (Mr Woodpecker) definitely being drama-free, I thought maybe we would be immune.

See it all started the night that I got engaged. My grandma called and of course wanted to know what the plans were.

Rather than doing the SMART thing and telling her: “Grandma, we’re still in the deciding phase, I’ll let you know when the plans firm up” I said something like this: “Grandma, we aren’t sure yet, but our tentative plan, that could change at any moment since we just got engaged an hour ago, is to do a small ceremony with just us and then do a road trip reception where we visit everyone. But it could change, that is just the idea right now.”

Well, even with all those qualifiers my grandma heard: “What we are definitely doing is having a wedding and none of the family is invited.” So, of course, she needed to TELL all of my aunts/uncles/etc that they are not invited to my wedding. Which whether they were or were not, wasn’t her place to tell them, it was mine. And the fact of the matter is that whether they are or not has, even of this moment, not been decided as we’re still trying to figure out what we are going to do for our wedding.

AND THEN, perhaps forgetting that she was told this was a tentative plan, started Facebook messaging my fiance telling him how she regrets that my aunts and uncles won’t be at my wedding.

AND NOW I have uncles and aunts messaging me on Facebook saying: “Why aren’t we invited to your wedding?!”

All of this because I was DUMB enough to share one possible idea out of the 10 or so that Mr Woodpecker and I have had in our month of engagement.

So I sent my grandma an email (I tried calling twice to no avail) and (tried) to politely ask her to stop telling people they weren’t invited to my wedding, it is my job to invite or not invite them. And to remind her that the only plan she has heard is the one I made clear on our engagement night was just an idea of the moment, not the “for sure” wedding plan.

And she wonders why I don’t like sharing things with her… every word she hears she shares with everyone else, whether she should or not.

Under $10,000!

I was going to make a post when Mr Woodpecker and I finally got under $10,000 on our credit card debt. Except I missed it. By about $1,000. (Ooops!)

It happened so fast! On the first of this month we had $10,511 in debt.  And as of today? We’re at $8,949!!!

Now that we’re in the 4-digits it feels SOOOOO good. We both gave each other giant high-fives when we hit below $10,000. Now that we’re at less than $9,000 the next milestone is half way! Can’t wait. =D

Net Worth November 2012

Time for my monthly Net Worth summary. Here goes:

Assets

  • Cash on hand: $500 (I always use this amount as it is an average of my cash available on any given day of the month.)
  • Home value: $177,000
  • Retirement: $23,094 (+2.44% from October 12)
  • Savings accounts: $1360 (-24.44% from October 12)

Liabilities

  • Home Mortgage: $162,073 (-0.44% from October 12)
  • Student loans: $12,571  (-1.41% from October 12)
  • Credit card debt: $10,591 (-25.83% from October 12)

Total Net Worth: $16,719 (+39.01% from October 12)

Net Worth Last Month: $12,027

Net Worth a Year Ago: -$2,074

My savings account has gone down since I save every year for Christmas and now I’m starting to spend that money. I also have decreased my contributions to it to pay down debt faster. So I’m not surprised that this value has decreased at all. My retirement value has also increased, but starting in January I’m going down to 3% contributions from 6% until my credit card debt is payed off. Since my job does not do retirement matching I’m going to do the remaining 3% in a ROTH IRA after the credit card is paid off.

As you can see the credit card debt has substantially decreased since last month. And it is still going down. Mr Woodpecker and I are anxiously waiting to get below $10,000. It will be a big deal to be in 4 digit debt instead of 5. =)

Insane 6 Months: Six Weeks Down!

Mr Woodpecker and I are working really hard to get all of the credit card debt paid off in 6 months. We’re now through 6 weeks and we’ve done an amazing job so far. In 6 weeks we’ve paid off $4087 in credit card debt!

It feels so good to pay it off! Here are the nuts and bolts of how we’re paying this debt off:

  • Living on my salary and putting his salary to debt payment.
  • I picked up two part time jobs: tutoring for $40/hr for 2-4 hours per week and working ~20 hrs/week at Kohls.
  • Mr Woodpecker has picked up my responsibilities at home while I work more.
  • Trimming the fat on our budget for things that aren’t necessities.
  • Sticking to our budget!
  • Talking regularly and openly about our budget and what we spend on things.

The stuff above is actually the easy part. The hard part I’ve found in the past is motivation. Here is what we do to stay motivated about getting out of debt:

  • Every time I get paid, I put it on the credit card immediately. I get texts from my bank everytime Kohl’s pays me. So as soon as I get that text I log on and put that exact amount on the credit card. On my way home from tutoring, I stop at the ATM and deposit the money. Then when I get home I put it immediately on the credit card. This keeps the money from being spent any other way. Last month I ended up with almost 15 payments on the credit card. Some large, some small. But all felt amazing!
  • I keep a record of our payments on the fridge door. Every time I make a payment I write it on a piece of paper that is on the fridge with the date of the payment. Seeing it there every time we open the door reminds us of what we’re doing and keeps us going. Mr. Woodpecker has told me that this is his biggest motivator because it is “right there” every time he goes to eat.
  • We celebrate every payment and milestone. By celebrate I mean high fives, hugs, and kisses. When I put a $58 payment on the credit card it is awesome to know that I have a partner who will congratulate me on that and be just as excited as I am about it.
  • We got engaged. Okay, not everyone can do this. But now we’re extra motivated to pay off this debt because we want to start our married life without it and we don’t want to have our wedding until it is paid off and we can save for our wedding and pay for it in cash. This is also another amazing motivation to keep us going.

I won’t lie, the past 6 weeks have been exhausting. Working 45-50 hrs per week at my normal job and then going to my part time job in the evenings and weekends is just hard. I miss him a lot. And he misses me. The only way I can do this is knowing that he is taking care of everything at home while I’m not there and knowing that it is only temporary. It has definitely made us cherish the 1 or 2 nights a week that we get where I don’t have to work  all the more!