Category Archives: Money

Guest post: From working part time to unemployment

This is a guest post from a reader and frequent commenter, Bobbi, who is from Florida. Bobbi loves personal finance blogs and recently began a new hobby — vegetable gardening. Though she’s currently unemployed, she’s exploring new possibilities, and she hopes to use her love for baking and cooking to earn money.

In June, I started working part time. I did this because my mother is getting older and I want to spend time with her. She needs help at home but with the economy the way it is, it will also help my employer. Work has really slowed down this past year on top of the summer season being normally slow in good economic times. The business has also taken quite a few hits recently. We’ve lost a lot of business on an account due to political reasons and another one of our clients filed bankruptcy. There was a lot of stress in the office and I felt like I wasn’t doing my best work. My boss was also very stressed over finances among other things. So basically, I would rather work part time and have a job, than get laid off.

THAT was the beginning of my post for Karen in July. Soon after I sent it to her, everything changed for me though.

I quit my job.

I could go into all the reasons and the ugliness that quitting turned into, but it really doesn’t matter in the long run. Suffice it to say there was a lot of hurt on both sides of this situation and this was the right decision for me.

I am very lucky in that I have an awesome family support system, but I also have an emergency fund and I budget well. I don’t have a mortgage and refinanced my car right before going part time just in case something like this happened. Yeah, I may pay a little more interest over time, but when I do get a job I can always catch it back up and even pay the car off. I have very little debt & utilities are low so I feel it was the right thing for me to do now. I can keep an eye on my mom and help her around the house. She is getting older now and will not go into a ‘home’ so we are going to do what it takes to keep her here. The stories I get to hear daily is so worth it.

So far I have been able to stay busy. We live on a piece of property and mom likes to get in the yard and do yard work so I have been helping her daily. We are a good team. My sister needs help with her kids after school and sometimes I run errands for her. I job hunt too. I have had some interviews but nothing has worked out yet. I know it will eventually. There are so many people looking it is really sad.

I also have since checked into unemployment and I did end up filing for it. Right now it is in a ‘pending’ state and they will call me and my employer to discuss and make a decision. This process will take 4-6 weeks. Hopefully I will have a job soon and won’t need it, but at least the ball is rolling in case I do need it. I am also looking into starting my own business. I have to admit that this option is scary to me, lol. I also think now is a good time to take a little time to myself and figure out exactly what I need to do and want to do. I am ok for now and am looking forward to the next adventure!

Thanks for reading.

Good news: the recession really is over

I’ve seen lots of posts in the blogosphere with tongue-in-cheek responses to yesterday’s news that the recession is over.

“Unemployment is still high.”

“The housing market is still in a slump.”

“People are still struggling.”

“What do you mean the recession is OVER?!”

Take heart: when an economy is actively in recession, it means economic activity is slowing down over a period of time. It was months and months after the start of the recession before economists finally looked at the numbers and said, “Whoa. We’re in a recession, guys.” And the announcement that it’s “over” comes over a year after its official end — which economists say was June 2009.

Now based on the numbers, the economy has stopped shrinking. Things may still feel pretty bad out there, but the news that recession is over means one thing: it’s getting better.

Does that mean things are going to turn around overnight? Absolutely not. After a recession this bad (the worst since the Great Depression), it takes time for everything to be okay again. And unfortunately, the economy is rebounding particularly slowly this time.

Historically, the economy takes years to rebound back to previous levels after a recession. Since this recession has been so deep, it makes sense that things may not be “good” again for a while. Since 1945, the average economic recession has lasted 10 months while the average economic expansion has lasted 57 months (source). That means it takes, on average, over 2 years for the economy to peak again after an average 10-month recession. This recession lasted 18 months, which means it will probably take a little longer than average for things to go back to normal.

But this really is good news. It means the worst is (hopefully) over.

In the meantime, try to keep looking on the bright side. This, too, shall pass. And when it does, we’ll all be armed with all of the frugal tricks we learned during the tough times to help safeguard us from future economic downturns.

Hidden costs of small-town life

When Tony accepted a teaching job at a community college in a small town in Indiana, we planned to move to Fort Wayne — the closest major city about 40 miles away. I wasn’t crazy about the 1-hour commute for my husband, though, especially since we share a car. When we started hunting for apartments, we also weren’t crazy about our choices — prices were high for the nice areas, and everything in our price range seemed run down.

When we found an apartment about five miles away from Tony’s job at almost half the price we were going to pay in Fort Wayne, we were ecstatic. Lower rent, no commuting costs, and it would be easy for me to drop Tony off at work in the morning if I needed the car for the day.

Two months later, I don’t regret our decision. I’m pretty happy in our little apartment, and there are definite financial perks to small-town living. We’re not spending the fortune on gas that would have been required if Tony was driving 2 hours round trip every day. We’re not as tempted to go out to dinner, because our restaurant options are bleak. And our favorite places for recreational shopping (mainly Target) require advanced planning since they’re 30 minutes to an hour away depending on which city we visit, so we don’t browse once a week and spend more money than we intended.

Unfortunately, I’ve also discovered some hidden costs. Some of them are financial. Most of them are a matter of convenience.

Cell phone reception stinks.

I’ve resorted to using Skype for 99% of my calls, because my cell phone is basically useless in my apartment. I have better luck when I’m not home, which is really what cell phones are for anyway, but the poor cell phone reception is SO annoying. We don’t have a landline. I considered installing one, but since all of our family and friends would be long distance calls, a landline wouldn’t be financially practical. So I’m dealing with the hassle of choppy reception on Skype and dropped calls.

Goodbye, free TV.

Remember last year when I shut off the cable? We loved our antenna reception back when we lived in a reasonably big metro area. But now? We hooked up our antenna, and we get nada. We live about 40 miles from the broadcast towers for all of the channels. Outdoor antennas aren’t allowed in our apartment, and our indoor antenna isn’t strong enough to pick up anything. Most of the shows we watch are available at or the network’s website, and there’s always Netflix, but my husband is pretty sad about missing out on football this season. We’ll also miss other live broadcasts, like the Oscars. Boo. We’re considering opting into the basic cable package for network channels, but the tightwad in me hates the idea of paying $18 a month for something that used to be free.

We use more gas.

We’re not using nearly the amount we would have if my husband was commuting every day. But driving 25-40 miles away “into the city” every other week or so adds up. The nearest midwife is about 25 miles away, and now that I’m in the final stage of my pregnancy, we’ll be driving there every other week.

Sharing a car is more difficult.

In North Carolina, the public transportation system wasn’t perfect, but it worked for us. We chose an apartment on a bus line, and my husband used the bus to get himself into campus for class. There’s no public transportation here, and because the area is pretty rural, it’s also not very walkable. Since I work from home, and my husband’s job is pretty close, I’m able to drop him off and pick him up if I need the car for the day. It’s not a big enough hassle for us to get a second car, but I do miss public transporation.

Making friends is tough.

In North Carolina, we made some friends through Tony’s graduate program. I also joined a book club through I wanted to meet some other young moms in the area when we first moved here. The closest meetup? The same town where my midwife is — 25 miles away. I joined, and I plan to attend some of the events, but I imagine it will be harder to make the trip on rural country roads when there’s snow on the ground and I have a newborn. Not to mention, when your friends live 25 miles away, it’s not as easy to pop in for a visit.

When we make our next move, we’d like to stick to the suburbs. I don’t want the cost or the hassle of big city life, but living in a small town is more of a hassle than I expected.

Photo by tonivc

Adjusting to our new lifestyle

This summer has been terrible for our finances. We haven’t had any income since May. Thankfully, our bills were drastically reduced for the first, oh, 6 weeks of summer while we stayed with Tony’s family. But we still had car insurance, health insurance, student loan payments, my health insurance deductible, and other expenses.

We moved into our own place in the middle of July, and ever since then we’ve been hemorrhaging money from our savings account. I try to remind myself that this is why we saved. We knew moving was going to be hard, and that Tony wouldn’t start work until August. And of course, when you start a new job, it’s always a few weeks before you receive your first paycheck.

Tony is scheduled to be paid for the first time today, and this month marks the first when we’ll be utilizing our new budget. Up until now, the name of the game has been Spend as Little as Humanly Possible, but I didn’t create a zero-based budget because we didn’t have a monthly income.

When Tony was first offered his adjunct teaching position, his salary wasn’t going to be enough to cover even our bare bones expenses. But they offered him additional classes (he’s now teaching 6), and the extra income took us barely over the edge. Thankfully, they’ve already offered him 6 classes for the spring semester, too, so we know we’ll be set until May. I’ve spent a lot of time crunching numbers, and it looks like we should be able to hang on to our savings if we can keep our budget very tight.

Unfortunately, there’s no room in our regular budget for savings. However, our regular budget is based only on my husband’s income. Any income I make through freelance work or blogging will be reserved for savings. So we’re hoping to replenish the $2,000 we spent from our emergency fund over the summer.

Our new monthly income is about 1/3 lower than our previous combined income. Our monthly savings budget took the biggest hit since we’re no longer including it in our regular budget (for now). But there are other shifting expenses. Our rent is much lower here, but we’re now paying about $500 a month for health insurance (and that will go up when the baby comes. Ugh.) We’re also spending money here and there buying things for the baby (diapers, clothing, etc.)

With new expenses and lower income, we’re trying to make major changes to our spending habits. Here are the biggest changes:

Groceries/Household Goods

I’ve jumped onto the drugstore game, and I’m doing pretty well. Unfortunately, my pregnancy has wreaked havoc on our food bill. When I go to the grocery store, I end up with tons of extra food in the cart. When I send my husband alone, our bill is lower, but I spend the week feeling like I’m starving and there’s not enough food. Sometimes I even send him out to pick things up. Harumph. I’m not sure how to get around it. I was never a big snacker before I got pregnant, but now it seems I need several snacks a day. And snacks are expensive. Hopefully my drugstore deals are offsetting our overspending on groceries. I’ll have to wait until the end of a full budget cycle to know for sure.


We’ve cut cable and most entertainment spending from our bill for now. I haven’t missed going out much since most days I don’t feel well enough to do anything but lay on the couch anyway. Now that we’re living in a smaller town, we’re also not tempted by recreational shopping trips that result in $50 worth of stuff from Target that we don’t need, and that definitely helps.


This apartment is much more energy efficient than our last place. So we’re saving money on our electric bill without even trying. Yay! We tend to keep our place cooler by default, so I’m anticipating lower energy use in the cooler months — at least until December when the baby arrives.

Our goal is to make it through the year with our emergency fund intact. The really ambitious goal is to replenish what we’ve spent and save a little more on top of that. We’re still working on cutting our spending to free up more money for savings. I’ll let you know how it goes!

Photo by purpleslog

More insurance company fun! /sarcasm

Oh, health insurance. Why must you make everything so complicated?

By the time I got pregnant, I thought I was pretty prepared for everything. As it turns out, I was not only unprepared for the emotional and physical stress of pregnancy, but there are many logistical issues that I never considered.

Last year, I found out that when a pregnancy spans two separate calendar years (pretty common considering the majority of pregnancies last 9 whole months), you’re responsible for paying your deductible twice. It makes sense in theory, but ugh. What a pain!

I’m lucky in this regard. My due date is December 9. My new midwife (who is fantastic, by the way, but that’s another post) says it’s highly unlikely that my pregnancy will continue beyond 42 weeks. I’m committed to a natural birth, but I’m willing to discuss induction at 42 weeks. That means I will likely go into labor by December 23 at the latest. Since I’ll deliver in 2010, I’ll pay a single deductible. Whew.

It wasn’t until a few days ago that I considered the possibility of a third deductible.

According to several resources, it’s common for hospitals to issue a separate bill for the baby’s hospital care after birth. Once the baby is born, he becomes an individual, and he’ll receive separate care in the hospital. Even in a normal birth that doesn’t require a stay in the NICU (fingers crossed that we’ll avoid that nightmare), the baby will incur his own medical bills.

I also found out that depending on the insurance provider and the policy, it’s possible that the baby will require his own insurance deductible. Blerg. Again, this makes sense in theory, and I can’t believe I never thought about it. But to be fair, you never really think about insurance deductibles for newborns until you’re pregnant.

Some insurance companies include newborns under their mother’s deductible for the first 30 days. Many include the hospital stay after delivery under the mother’s deductible, but well baby care after discharge is separate. It really just depends on the insurance provider and the policy.

My individual deductible is $2,500. I’ve already met my deductible for this year with prenatal care, so I was looking forward to owing $0 after my delivery. A separate deductible for our new baby would change that. Even routine well baby care for a two-day hospital stay can add up pretty quickly. He’d likely reach his own deductible after just a couple days in the hospital, and $2,500 isn’t chump change.

As much as I hate (hate hate hate) calling my insurance company, I needed to know how they would handle my new baby’s deductible. If we were going to owe $2,500 to the hospital after the birth, I’d rather prepare for it than be hit with a surprise bill.

Of course, it’s not possible to call my insurance company and speak to a person without sitting through an impossible automated system that asks 45 questions. Half the time, the automated system doesn’t understand my responses, and I have to repeat myself four or five times. As I’m transferred from department to department, I have to answer the same questions two or three times. There is nothing I hate more than talking — out loud — to a robot. It is a complete nightmare. But I’m lucky to have health insurance at all, even COBRA, so I deal with it.

The conclusion? The baby’s hospital care will be included under my deductible. Once we’re discharged from the hospital, he will become an individual policy holder with his own deductible.

If you’re pregnant (or considering getting pregnant), I suggest you check with your insurance company to find out their policy for handling deductibles for newborns. It’s better to be prepared than surprised!

Photo by joannao

Planning ahead for our baby’s education

Tony and I have always agreed that a college education is something we want for our children — and it’s something that we want to help them obtain. I know this is a controversial subject, so let me begin by saying I’m not up for debating it. It’s a priority for us, and that’s that.

Traditionally, middle-class students get the shaft when it comes to college funding. I was a very good student, and I worked very hard to qualify for scholarships, but it’s a competitive market. The average above-average student qualifies for very little money when it comes to scholarships. I worked two jobs through college, and I still ended up deep in debt by the time I graduated. It’s definitely true that I could have made better choices when it came to borrowing money, but the fact remains that I needed some help funding my education. Tony and I want to be able to provide that help for our children.

Much like retirement saving, time is your best friend when it comes to saving for college. I’ve run some numbers using a few college savings calculators, and frankly, I disagree with their numbers. Our plan is to save enough to pay tuition only at a public university. We will expect our child(ren) to work as much as possible to cover certain living expenses. We also anticipate sending some money to cover part of his living expenses on a month-to-month basis.

As of right now, our budget is too tight to set any hard and fast numbers for monthly savings. But we know that if we start contributing even just a little money each year to a 529 savings plan, it will be much easier to save enough over the next 18 years than if we wait until he’s a teenager.

Our philosophy for retirement savings has been similar. We each have a Roth IRA, and we contribute as much as we can each year. Right now, it’s not a lot. But the plan is in place, and as our income increases, so will our savings.

Our plan is to open a 529 savings plan shortly after our baby is born. Our retirement savings will remain our priority, but we want to have the savings account in place to encourage us to put money away when we can. We’ll also let grandparents and other loved ones know that the savings account exists. We don’t expect anyone else to contribute to it, but we want them to know that especially in the baby’s first few years of life, if they want to give him gifts, we’d prefer they contribute to his college savings rather than spoiling him with tons of toys.

By starting early, we’ll have years of interest on our side. We’ll also have more time, which means lower monthly contributions will add up over the years. Even just $50 a month at 8% interest will net us close to $25,000 by the time our son starts college. That wouldn’t be enough to cover his tuition for 4 years, but that’s $25,000 less that he’d have to borrow, which makes a huge difference. We’re obviously hoping our income and budget will change through the years, though, and we’ll eventually be able to save more every month.

Beginning early will give us a head start. It will also give well-meaning family members who want to help with his education a place to put a few bucks every year if they want.

Are you saving for your child’s education? What’s your plan?

Photo by hmocopymonkey

Challenge yourself with a No Spend Month

For the past couple of years one of my favorite bloggers, Rachel at Small Notebook, has challenged herself to a month of very limited spending and written about her results. Last year, I was inspired to try a challenge of my own — a summer of cash budgeting.

It may seem like a month or two of limited spending won’t make much of a dent in your overall budget, but we were amazing at how much we could actually save in just 30 days without extra spending. More importantly, though, the psychological effects of just 30 days of limited spending can last for months or longer. Teaching yourself how little you really need to be happy can permanently alter your attitude about spending. As Rachel wrote today:

I thought once the month was over we would be desperate to go out for coffee or to go out to eat, but it wasn’t the way you would think. An entire month is long enough to change your perspective about spending money and what you get from it.  You can change your habits. You suddenly realize the value of a dollar when you have to stretch every single one and make it count.

Our experience was similar. Instead of running out and spending money at the end of last summer, we were much more careful about money as we headed into the fall months. We’d learned just how little we really need to be happy, and we learned how much more valuable it is to keep money in the bank. We also learned that challenging ourselves to spend as little as possible didn’t have to be an exercise in deprivation — it could be kind of a fun game.

Rachel at Small Notebook has decided to skip the challenge this month, but I urge you to head over to her blog and read about her past experiences with No Spend Month. Hopefully you’ll find the same inspiration I did to make some positive changes to your spending habits this summer.

Why I’m a money multitasker

Last week’s post about holding off on paying down debt sparked a little controversy in the comments. I wanted to clarify some of my views, because there seems to be some confusion about my financial philosophy.

First of all, I am not debt free. I have never claimed to be. Like most 25-year-olds, my husband and I both carry student loan debt. I’ve written about it before. I don’t regret a day of my education, but I do regret some of my financial choices during that time. But it’s done now.

My husband is a graduate student. I earn an entry level salary. We’ve been blessed with a few pay increases over the past few years, but our income remains pretty low by today’s standards.

When I started this blog, I was depressed about our financial situation. We had credit card debt, student loan debt, no savings, tuition to pay, and we still felt like we didn’t have any money left over for fun. I wanted to learn to save without sacrificing fun.

Since then we’ve adapted to spending very little money in our daily lives. We don’t eat out. We shop the clearance racks (when we do shop). We meal plan. We share a single vehicle. The result is that 30% of our income goes directly into savings. Another 10% of our income goes toward debt repayment.

As my husband prepares to graduate next month, and we prepare to close this chapter in our lives, we have been spending more than usual lately. After three years of frugal living and hard work to pay off credit card debt, build an emergency fund, save for our move, and save for our vacation, we are rewarding ourselves.

I did not ask for permission. I don’t think any of you should ask for permission from anyone when you make decisions about how to manage your money. The point of my blog — from the beginning — was for my husband and I to learn to live on less than our already low income so that we could have enough money to pay debt, save, and enjoy life. Those are my priorities.

I have never subscribed to the Dave Ramsey philosophy. I understand that it’s worked for many people. I admire them, and would never ever judge their choices. I’m happy for them, because they’re happy. But putting every single penny of my extra income toward debt repayment doesn’t make me happy. I don’t want to wait until I’m debt-free to have children, own a home, or see Europe. So I’m using some of my extra income to save for these goals while I pay down our debt.

I admire the commitment to debt-free living, I do, but there is room in my budget for more than that. Dave Ramsey’s baby steps philosophy is focused on one thing at a time — save, then pay debt, then save some more. Only after you’ve saved and paid debt is there room for fun. I just don’t believe that.

I come from the generation of multitaskers, and I think if you’re smart about your spending, you can do a lot even with a very limited salary — without increasing your debt. You can save money, have fun, and pay down debt at the same time. It will take a little longer, but it’s worth it to me. I will eventually be debt free. That low-interest debt will be there waiting for me when we get back from Europe. And we will pay it off — on our own terms and our own timeline.

What Dave Ramsey takes for granted is that we have all the time in the world. But what happens if you spend your young life doing nothing but saving and paying down debt, and then your life is cut short by tragedy? You’re left with no time to enjoy the riches you’ve accumulated. I’d rather multitask now and know that I won’t run out of time before I can enjoy the fruits of all that saving and hard work.

When we get home, it’s back to counting every penny, just like we have for the past three years. It’s back to saving for our goals through very limited spending. We can’t forget about why we’re doing this, though. We want to build a better life for ourselves, and sometimes that means spending a little money.

The whole point of budgeting is making your money go further. If there’s something you’ve been wanting to save for, don’t wait for permission. Start saving now. I think you’d be surprised at just how far your money goes if you spend carefully.

Photo by amagill

Why we chose to let debt-free living wait

Update: I just wanted to clarify something. We are currently repaying our student loan debt slowly but surely. Our loans are not in forbearance. We just aren’t focusing our efforts solely on debt repayment. We’re splitting our extra income between debt repayment and savings.

In January 2009, we paid off our credit card debt. Compared to some of the debt horror stories you hear, our amount was relatively low — it was about $4,000 left over from college overspending and car repairs. We paid it off in just over a year while Tony was a graduate student and I was working in retail. Money was very tight at the time, so we’ve always been proud that we were not only able to avoid increasing out debt at that time, but we were able to pay it off.

We’re not debt-free, though. Not even close. Between the two of us, we still have a huge chunk of student loan debt — to the tune of $50,000.

For the past year or so, we’ve continued to pay minimum payments on my loans. We haven’t even begun paying Tony’s debt back because his loans are deferred until he graduates.

So here’s my confession: for right now, paying off our student loan debt is not our #1 priority. And it probably won’t be for another 5 years.

When we were working to pay off our credit card debt, we weren’t using every penny of our extra income for debt-repayment. We knew we had a move coming up in a year, and we wanted to build an emergency fund because we wanted to start a family. We made the decision to split our income between savings and debt repayment.

Right after we finished paying off our credit card debt, our plan was to use that money to pay off our student loans. But when you’re living on a small income, there just isn’t a lot of money to go around. We realized that in order to reach our savings goals, we’d need to divert a lot more money into savings.

Then we started talking about Europe. Believe me, I know that in the frugal community, saving for a vacation like that with as much debt as we have is a no-no. But you know what? We didn’t want to wait until we were debt-free to live our lives. Sure, we could put every penny toward debt and really work to pay down those student loans right now. Even then, we’d be well into our 30s before they were paid off. By then we’ll have children, maybe even a house, and a lot more financial responsibility. We’ll hopefully have more income, too.

Does debt-repayment mean putting everything else on hold when you’re young? In my opinion, no. For some people, the rush they get from sending another huge payment to pay off debt is enough to keep them motivated. Not me. If we were using every penny to pay off debt right now, it would be so depressing for me.

Unless we magically double our income overnight, it’s going to take us years to pay off this debt. For years and years, our only focus would be debt repayment. I’m not going to wait to do and see the things I want to see. I’m not going to wait to start a family or save for a house. That debt is going to be there for a long time. I can’t wait that long to live my life.

That doesn’t mean we don’t have a plan, though. There are just a couple things that are going to come first. When we get settled in Indiana, we’ll be in survival mode until Tony gets settled in a job. Then we’ll replenish our emergency fund. Then we’ll start saving for a house. Once we’re moved into a house, it will finally be time for us to put all of our extra money toward those debts.

This method isn’t for everyone. I’m sure many of you think it’s crazy for us to leave that debt alone for the next 5 years or so, accruing interest. When it’s time to pay it off, though, I plan to do it in about 5 years. Our plan is to buy a very modest starter home, which will help us put more money toward debt. It will be tough, but at least I’ll know that I’m not missing out on experiences in order to do it.

Photo by sgw