Babyboomers Beget Babies of Babyboomers

I am a Baby Boomer. I don't say that as if it's a badge of honor but it does carry with it the notion that we are a special generation. Most Baby Boomers are associated with possessing a rejection or redefinition of traditional values despite having been a generation that most commonly grew up in a time of affluence. In fact, as a group, we were the healthiest, and wealthiest generation to our time and among the first to grow up genuinely expecting the world to improve with time.

In fact, I was so convinced that things would just continue to improve that I didn't think I needed to extend much effort, including finishing school. Somehow, the benefits of growing up with the security of a roof over my head, a good job and all I could want, would just follow me wherever I went.

This was reinforced by the fact that I had the good fortune of landing really good jobs in my late teens. I enjoyed work in those days and because I was a real people-pleaser, I had no problem getting noticed and learning the art of how to get promoted quickly. The fourth job I ever had was with Apple Computer. Apple was the epitomy of a company culture started by Baby Boomers. Apple re-defined what changing all of the rules meant and my time spent there continued to promote and encourage my independent character and demand for the best of all that life could offer (or at least money could offer).

I remember my first business trip with Apple at age 21. I was picked up by a limo driver and taken to SF International Airport for a business trip to Calgary, Canada. I flew business class and in Calgary, stayed at the best hotel available. My stay was four days but my actual hours worked were about six. The remainder of the time was spent touring the city, eating new exotic foods, experiencing my first massages and getting a taste for good life, all on Apple. I remember thinking that I had arrived and I was only going forward from there. 

I received a call while in Canada that I was needed for a show in NY City following this trip. This was my first trip to the Big Apple and I was asked to demonstrate Apple Hardware at the Financial Business Analysts Meeting at the World Trade Center. Our CEO, John Sculley, and all of Wall Street were there asking me for one on one demonstrations of our new products. I think if I had only grasped what I was actually doing at the time, it would have been too much to bear. 

Larry and I met while working for Apple and after working there for almost 13 years. Both of us had grown up with the lavish benefits of working for this company at a time in our industry where we thought we could never be touched! Our entire courtship was funded by Apple as we worked in sister organizations providing us with trips around the world - all expenses paid! So it's no wonder that our marriage began with the mindset that we deserved the best and that living the lives of the rich and famous would just continue.

Sadly, there was a huge cost to this insatiable desire. The most costly was my time. My job with Apple required that I travel about 80% of the time. That meant that someone else would be raising my kids and when I was home to see them, I was exhausted. In my mind, it all made perfect sense. I made great money and on occasion I got to take them with me on these trips so they were afforded all of the benefits of my hard work. Makes sense right? Wrong.

I had no idea that what our pursuit for stuff and lifestyle was really telling our kids was that happiness existed in things or in outrageous experiences. Further, because we never learned the wisdom of saving for a rainy day or investing for the future, we never taught that to our children either. Therefore, they grew up as we had modeled, expecting things to just fall in their laps with little or no effort on their parts and wondering why life was so tough when they had to maintain this lifestyle on their own. Or, they decided to drop out of this materialistic society and live on love!

Larry and I have five kids between us and it's interesting to see how our choices have affected them. Out of the five, one is a saver, an investor, and a very hard worker. I think she saw our choices as potentially harmful and feared our living on the edge choices. She committed to 'never living like that'. It's the 'fear' part that concerns me. While I'm so happy that she has adopted these good saving habits, I hope that she'll manage to have some enjoyment in living without the fear of making our same mistakes. 

Two of the five kids have openly adopted a lifestyle that is in complete opposition to anything that remotely smells of materialism. They are our silent sufferers. They definitely adopted the "I'm doing it my way and to heck with societal norms" approach to life, regardless of the struggles that they appear to be having. Our hope for them is that they find the balance of earning as much as they can so they are free to live whatever life they choose without so much personal hardship. 

One of them is a mirrored image of us - living on the edge, seizing every opportunity for fun and party making. "Tomorrow will take care of itself - in the meantime, enjoy all that money can buy". Unfortunately, we are living in a vastly different time. Without an effective and solid plan, the world will have it's way, as we've seen all over the news. Oh how I wish, we would have been better stewards of our resources and better teachers to our kids.

The final child is a mixture of all of them. She has the conscience of knowing that there is a better way to live but a deep taste for the 'sugar'. The battle of those two things rages wildly in her. At a relatively young age, she has already experienced some of the heartache of these choices. I pray she learns how to limit the desire to spoil herself in exchange for a safer and potentially more secure future.

I find myself wondering how many other baby boomer children of the baby boomer generation did not have the benefit of role models or good teaching. For those who followed my path, I'm confident that we have produced a generation of confused consumers and disillusioned children. What really concerns me is that many of these kids are suffering the fall out for the former generations choices.

I'm writing this blog primarily for the grandbabies of the baby boomer generation. My hope is that they will find good teaching and excellent examples of people who have learned how to live below their means - people who have found that time with people is more important than a garage filled with stuff. I'm committed to being one of those examples. I'm thankful that I still have time to do it right and that my own grandchildren may see an example of someone who loves the gift of life more than the gifts. May they develop a desire to love people and use things. May they cherish the things that they do have and be satisfied that it is always 'enough'.

Will you join me in being an example for these future generations? There is a prayer that I learned at a very early age and it's one that I've adopted again and I recite each morning. It's one that I've committed to teaching my grandkids for in it is a reminder to always ask God first for all that they need and to only ask for that which is truly needed and nothing more (anything above is truly a gift)  I like the translation below - it may be a bit different than the one you learned.

"Our Father which art in heaven, Holy is your name. 

Thy kingdom come. Thy will be done, as in heaven, so in earth.

GIVE US DAY BY DAY, OUR DAILY BREAD.

And forgive us our sins; for we also forgive every one that sins against us. And lead us not into temptation; but deliver us from evil."

Amen.

What Does Your Checkbook Say About You???

I've been thinking a lot about our financial journey in recent days and, like most times of reflection, I've come to some revelations.

And, like many times of reflection, some revelations are not as pleasant as others. So is the case with this most recent occasion.

I remember Larry and I reading a book about 12 years ago titled, "Your Money or Your Life". It was a really inspiring story of two very successful stock brokers from New York that were tired of the proverbial rat race. The book chronicles the course of action that they pursued in order to change their lives. Their ultimate goal was to become Financially Independent. At first blush, this sounds like most people. Yet, their definition of independence was a bit unique. They considered the notion of independence to be one where money would no longer have a hold on your life. You could actually live 'free' from it.

They take you on a personal journey of discovery including: documenting every penny you've ever made and giving an account for it, tracking your expenses (to the penny) for a period of two weeks, and spending time developing a 'fulfillment rating' for the activities you do in your life. An example of the Fulfillment Rating would be to assign a number of 1-5 (one being the highest level of fulfillment) to all of the activities in your life. Once completed, you would take your expense sheet (where all of your money went) and lay that against your Fulfillment Chart. In our case, we found that our expenses were in no way a reflection of where we found our greatest joy.

The final activity was an exercise to determine what your current job was actually paying you once you netted out all of the intangible costs. For example, what type of car do you have to drive for that job, how far do you travel, what clothes do you have to own, how many stress days do you have to take, how many hours are you actually away from the home, etc. Once we completed this exercise, we were amazed. In fact, I learned that the six figure salary I was earning was actually netting me about $12/hour, once I deducted these hidden costs. It was out of this exercise that we decided to leave the bay area and move to the foothills of the Sierra Nevada to raise our kids and improve our quality of living. A move in my life that I've never regretted.

Sadly, like so many other great inspirations, we never completed this journey. Instead, we grabbed on to the notion of a lower cost of living lifestyle while still earning high incomes. The net effect was that we continued to spend every penny we had and ultimately drove ourselves right to the poor house (or in our case, the trailer house).

Today, I was asked the question, "What does your bank statement say about your values"? 

It's a really fair question and one that I haven't asked in a long time. While my bank statement is dramatically skinnier than it has been in years and the fact that we currently do live beneath our means exists, I'm still not happy with what it says about my values.

In a time when every marketing message aimed our way says 'you deserve better', 'live for today', 'take care of number one', it's difficult to stay focused on the dreams that I had for a bigger impact on the world. 

In my own county, homelessness has just increased a whopping 29%, yet I'm continually concerned about the color of my walls. I say that I care about kids who have no parents, yet you would never know that by the entries in my check register. Rather, my banking statement says quite loudly that I've bought the madison avenue messages hook, line and sinker -  I'm numero uno! 

It's no wonder our nation is fighting over health care reform. Who cares about the other guy - I've got to take care of me and mine! 

I'm guessing that there are others out there like me, who, when faced with the realization that you are not living the life you say you want to live becomes the motivation to do something about it. If so, I'd love to hear from you. Perhaps if more of us started to really analyze our pocketbooks as a statement of our values, we'd actually begin to live the lives we were called to.

What does your checkbook say about you and what you value?

About Friendship...

I had a lot of time to think about friendship this past week while visiting my home town. I had hoped to see several friends while there but ended up falling short of my plans. It reminded me of what life was like in the past when making time for friends was an afterthought.

When I was a 'career' woman and living life, friends were people that could fit in to my schedule. If I wasn't too busy working, shuffling kids, attending seminars or taking well needed vacations, I could make time for them. Larry and I remember meeting one couple that we had really hoped to spend time with so we tried week after week to find time in our schedules to get together. We lived 30 minutes apart but it seemed like an impossible task. It wasn't until we were on vacation - 200 miles from home - that we ran in to them. I think all of us were struck with the sadness of our mutual too-busy schedules.

Our dear friend Gordy used to say, if you have more friends than you have fingers then a) you don't know the meaning of friendship, or b) you are a freak of nature. I never really understood that until I had the type of friends that I think he considered finger-worthy. It took me years to understand what he meant because to me, friends were all of the acquaintances that came and went through the doors of my life. I don't think I would have ever been able to say I had a "BFF" and it was never really clear whether the 'friends' I had picked, had picked me. I think that this is a sad artifact of living an upwardly mobile lifestyle. If friendship isn't part of that plan, then you probably won't find time for it.

I regret that I lived my life this way for far too many years. Coupled with the fact that I didn't know myself well enough to make myself fit for a long lasting and intimate friendship. (Anything less than that is a relationship of casual acquaintance).

Of all of the things I am thankful for, it is learning how important friendship really is in a persons life. Larry and I have always had an incredible friendship between us but it is so important for each of us to have deep bonds with other people. In the process of changing our lives and slowing down, we have finally found out just how sweet having friends to share our dreams, hurts, struggles and joys with can be! Where we used to have great intentions to see our friends, today, we see them. We are doing life with these people and it's made our life so much sweeter. I wish I would have learned this lesson sooner and had been a better friend to those that considered me theirs.

To all of my friends, I'm so thankful for you. I cherish you and I can't imagine life without you!

Jan

These are a few of my favorite things...

Raindrops on roses, whiskers on kittens - discounted shopping and cheaper brewed coffee, these are a few of my favorite things!


It's no surprise for you to learn that I have become a discount shopping enthusiast. It's become a bit of a challenge and a thrill when I find something at a substantially lower price than retail. I'm sharing some of my favorite discount shopping resources in this blog. Please send your own so we can build an empire of discount resources!


www.retailmenot.com - Retailmenot is an online shopping community dedicated to the 'frugal shopper'. It is the most comprehensive site for finding online and store coupons you can find. Regardless of the types of shopping items you seek, retailmenot probably has the coupons. Print them out and start savings. They also offer a site to help make the most of your online process at tips.retailmenot.com. Be sure to read this page before starting to shop.


www.mygrocerydeals.com - I love this site! I have gotten so frustrated in the past thinking that I have found the best deal on pork loin, only to find that the store right next to me had it on sale for .50/lb cheaper. Mygrocerydeals.com solves that problem. You enter your zip code and select from the list of grocery stores available in your area. Their extensive database returns that weeks specials advertised at all stores in your area. It also has a coupon clipper of nationally advertised specials you can print, as well. My favorite feature is the search tool. Let's say you are looking for the best deal on Greek Yogurt. Enter 'greek yogurt' in to the search field, and you'll get a return on all of the specials at stores in your area. It's very cool and has proven to be accurate 100% of the time when I've used them. TIP: If your store is not activated in their list, send them an email. I did this and within 24 hours my store was added.


www.e-mealz.com - E-Mealz is a service that Dave Ramsey has recommended on his radio program. For as little as $5/month, E-mealz helps busy people plan weekly meals with ease. After entering your grocery store of choice, identifying how many people you are feeding and selecting the type of meals you enjoy (i.e., low fat, low carb, etc.), their site will return complete meal plans with shopping lists at your store. You'll get recipes with instructions for your specified number of eaters and an aisle by aisle shopping list. 


www.peterjamescoffee.com - I have to thank my dear friend Shelley for this tip. Years ago Shelley shared Peter James with me and I've been a fan ever since. Peter James is a wholesale roaster in the East bay of California. They roast their coffee and sell it at wholesale pricing, provided you meet their modest requirements. Not only is this the best priced coffee (for blends, premiums or organics) but it is the best tasting that I've found. The coffee industry as a whole plays a trick on us. They sell us coffee in this handy (12 oz) bags making us think we are getting a pound of coffee for that hefty $8.00/bag. I always thought I was paying about $8-$9/pound when in actuality I was paying around $12.00. Peter James actually sells you coffee in one pound increments and on average, you'll pay about $6.50/pound. The product list is extensive and you'll find something for all tastes. They require that you purchase a minimum of one 5 lb bag or 2 2 lb bags to qualify for wholesale pricing. There is a .20/pound grinding fee. Mark is the roaster and is likely to answer the phone if you call. I just placed an order last Tuesday, they roasted it on Wednesday and I received it in Oregon on Friday! I love these guys!


I previously mentioned some of my other favorites but here's a re-cap of some of my weekly visits for grocery and other items - 


Dollar Store (there are lots of these out there under different names) - remember them for basic sundry items, birthday cards and more


Bi-Mart - This is a co-op but I've never found them to hold me to joining. You have to shop there regularly to find the gems but when you do, they typically beat any other pricing. Think of this is a mini-Walmart - you can get anything.


Craigslist (www.craigslist.com) - Probably my favorite place to shop - especially the 'Free' area. Again, create an RSS feed and you'll get notified with new postings. If you are really ambitious, pick up some of these free items and sell them. It's similar to flipping houses but not as hefty an investment!


Habitat for Humanity Re-Store - Larry's blog will go in to great detail as to the amazing finds we've found here. In addition to getting free or really underpriced items, you are helping your local community build homes for deserving families. They also offer a senior discount of 20% (at our store) - this makes the discounts absolutely unbelievable. You can find furniture, building materials, plumbing supplies and art! There is also something very rewarding about re-using materials. We feel like we are helping do our part to limit the waste in our world each time we shop here. Give it a try!


Let me know some of your discount secrets and I'll share them with our readers. At a time when everyone is trying to save, these tips go a long way. Happy savings!

7 Debt Solutions

If you are at the beginning stages of your debt problems and looking for options, you are at the point we were about three years ago. It was becoming clearer to us that we had run out of our own 'creative' solutions to solving our debt problems and we needed professional help.

I had worked for a Financial Services company just prior to this time in our life so I was fully aware of the options. I just wasn't able to settle on one that we hadn't already tried or that we could get behind for personal & ethical reasons. I'll go in to detail as to our reasoning as I review each of the Seven Most Common Debt Solutions.

1) Do Nothing. Believe it or not, this is the position many people take. They are under the stress daily but they are paralyzed to the point of doing nothing. Clearly, this position only makes the situation worse. Creditors do not stop calling, the debt continues to rise and so does your stress level. 

OUR POSITION - We tried this one for almost a year - hoping that conditions would just miraculously change. The truth is, you got yourself in to this mess and you'll have to do the work to get out of it. We finally got to that point and recognized that it was going to take work and personal discipline to turn this mess around. It was also going to require a change in heart. We had to become different people as it related to our views of money, time and purpose.

2) Credit Counseling. Credit Counseling companies are structured to act as a facilitator on your behalf. You sit down with them, review your debt and come up with a financial plan that you can live with. Once you've agreed upon a budget, they will combine all of your debt in to one payment, roll in their fees and then you mail your payment to them monthly. In turn, they will contact all of your creditors and attempt to negotiate lowering your interest rates in order to lower your monthly budget. In 2000, the Better Business Bureau (BBB) had only 404 registered complaints with all credit counseling companies combined. At the time, these companies were primarily non-profit debt help organizations and genuinely inclined to provide a human service. What about five years later? In 2005, the BBB had 1286 registered complaints with credit counseling companies (many for profit), roughly 190 per year over five years. There are still good companies out there but do your research before engaging.

OUR POSITION - We had already contact all of our creditors and had some success lowering our interest rates. We felt that this was something we could do without the help or fees of a Credit Counseling service. Additionally, credit counseling stays on your credit report for about seven years. This was no better than the damage done by Bankruptcy so we ruled this out as an option.

3) Debt Consolidation. Debt consolidation is the process of rolling all of your debt in to one consolidated loan - typically secured. The advantages are clear; one payment rather than multiple, typically a lower interest rate and one creditor to manage. The disadvantages are worth seriously considering; with one creditor, the temptation to start using your cards again is huge; most consolidation loans originate from your mortgage - this will spread your debt out to 10-25 years and removes real equity from your home; debt consolidation loans are secured debt so if you do have difficulty making the payments, you risk losing the asset.

OUR POSITION - The thought of going out and getting yet ANOTHER loan to solve our loan problems seemed crazy. Additionally, we had no equity left in our home from having already borrowed from it in the past. We concluded that we had not yet learned the root cause of our spending problems and we risked keeping ourselves in trouble by seeking another loan. Thus, we ruled this one out.

4) Debt Settlement. The company that I worked for specialized in Debt Settlement. They were very successful at decreasing peoples debt and getting them in a better financial position (at least at first glance). Debt Settlement is the process of negotiating down your debt with your creditors. Again, this is something you can do without the help of a settlement company but typically these firms have better success. The process is as follows; you tell the debt settlement company what you can afford to pay towards all of your debt on a monthly basis, they review all of your debt and determine whether they believe they can negotiate the debt low enough (including their fees) to accommodate that monthly amount. They typically can negotiate your debt down 40-50% of what is owed. The typical repayment plan takes about 33 months. The risks are; say good bye to your credit - they will ask you to stop making payments for at least three months to all creditors so that they are more likely to negotiate; the credit calls will increase and can get quite nasty and uncomfortable - the debt firm will give you great tools to help avoid this but your best bet is to change your phone numbers! Also, they might not have success negotiating all debt so the 'plan' can vary. Finally, you will be hit with taxes on the amount of debt forgiven by a Debt Settlement plan - be prepared for this at tax time. Plus the amount forgiven remains on your credit report as 'unsettled'.

OUR POSITION - This was the plan we had most difficulty with. We just never felt right about asking our creditors to lower the amount we owed them, especially by half! We made each purchase with the intent of paying for the items, not doing so felt like stealing.

5) Borrowing the money from friends or family. Clearly, our friends and family love us and they want the best for us. While watching us squander our money was difficult for our family to watch, they cared for us and hated seeing us in financial duress. Therefore, we accepted loans from our parents, friends and colleagues. We regret this most. Defaulting on an unknown face is one thing, but doing this to family - ouch! As I mentioned in my last blog, these loans will be repaid through our bankruptcy but not for 4 or 5 years. Each time I see these people, I'm reminded of how I disappointed them and I regret my choices.

OUR POSITION - We tried this and regretted it so our recommendation is to avoid this as an option.

6) Establishing a personal repayment plan and living within a budget. This is the best option if you can do it. It will require a combination of all of the above options; negotiating your interest rates down, asking for forgiveness on fines/fees, perhaps even consolidating the loans in to a lower interest plan. Finally, committing to living within a budget is the only thing that will secure success for the long term. Acknowledging your bad habits, changing them for good and living differently.

OUR POSITION. We have now adopted this plan for our future. However, three years ago our debt had exceeded two times our annual income (I say this with embarrassment, regret and a good deal of shame). The majority of the debt was IRS in the form of penalties, fines and increased interest rates. We attempted to work with them but all efforts failed. Our hope for ever repaying this debt was lost once we completed a thorough assessment of our situation. Our only option was some sort of personal reorganization of our debt.

7) Bankruptcy - Most people think of bankruptcy as the process of being forgiven from all of your debt and living with the consequences of bad credit for 7-10 years. Actually, that is just one of the Bankruptcy provisions. There are actually three bankruptcy codes; 7, 11 & 13.

Chapter 7 is the most severe, can be used by all individuals and businesses. All unsecured debts are terminated, and are paid if any money remains after secured creditors are paid and after various exemptions permitted by law are claimed by debtors. 

Chapter 13 is typically used by wage earners and small businesses; this delays and reduces amount of payments to creditors over a period of time; this is known as a Chapter 13 Plan, or an individual reorganization. 

Chapter 11 is used by larger businesses, and resembles a Chapter 13, with many more requirements. If all a debtor needs, is a plan to pay off debts, then a Chapter 13 or Chapter 11 is preferable, rather than a Chapter 7, particularly when trying to reestablish their credit worthiness.

All of these plans have their own advantages and disadvantages - all of them will harm your credit for at least 7-10 years. You'll want to weigh the advantages and determine whether the options align with your own ethics and personal situation.

OUR POSITION - Chapter 7 was out for us. Again, we wanted to pay back our creditors. We just needed a plan that would make that possible. We had already damaged our credit and believed no matter what solution we picked, we would suffer those consequences for a while. We opted for Chapter 13 because the plan requires that all debt be repaid at a maximum limit of five years and ALL creditors would be repaid. The process is lengthy and not everyone qualifies. Fortunately, our lawyer was able to structure a five year plan that paid everyone back over a period of five years. The monthly payment is a KILLER but we haven't missed a payment in two years and we are seeing debts resolved! NOTE: In a Chapter 13, all unsecured creditors are paid last and all interest is forgiven. All secured creditors are paid first and all penalties, fines and fees are forgiven (This is what saved us). However, secured creditors do receive interest on their debt at a reduced interest rate of about half.

As you can see, there are countless options and I only identified the seven most popular. My encouragement is to not give up hope, stop the behavior that got you in this place and begin your research. Seek wise counsel and if you believe in the power of prayer, pray. We found that once we sought God's forgiveness and accepted it, we were able to do a 180 in our lives and starting living a life free from overwhelming debt.

We haven't used a credit card in two years and plan to never use one again. We live on a budget and pay cash for things that we planned. The best news of our plan is that we will be DEBT FREE in three years! Just at the time Larry will retire, we'll have no payments. That could have never happened if we continued on the path we were on.

May you find solutions that solve your financial worries and seek the life that we were meant to live!

Do What I Say, Not What I Do (or did)....

This next blog will usher in a discussion of our ultimate decision to file for a Chapter 13 bankruptcy. However, before I start, I think it's important for me to say that this was our journey and these are the steps we followed which led to this decision. We do not endorse or recommend any financial decision that one may make. My hope is that by outlining some of our considerations (and mistakes) you'll be armed with additional tools as you wade through some of the same issues.

We ultimately chose to file for Chapter 13 for two reasons; 1) it was the only remaining viable option for us 2) it provided a way for us to pay back all of our creditors (which was critically important to us).

Long before we were faced with this decision, we made dozens of poor decisions along the way - all of which led to our current situation. Therefore, I've titled this blog, "Do what I say, not what I do". This list is comprised of stupid things we actually did and ones that appear to be pretty popular by most Americans.

LIST OF DUMB FINANCIAL CHOICES
1) Buy a home too early and out of desperation - We had plenty of help with this one! There was a steady stream of realtors, lenders, appraisers and escrow officers lined up to support us in our effort to buy a home (even though we should never have been considered). There are 100's of loan programs out there to support any financial condition and we were happy to participate in the worst of them - including 100% financed loans, loans with balloon payments or 1st and 2nd loans at interest rates no one in their right mind would consider. Clearly, we were not in our right mind. Seek wise counsel, save up for your down payment, protect your credit rating and wait for the right opportunity. You are the only one who TRULY cares about your financial health - don't put it in the hands of these vendors who claim to have your best interest in mind.

2) Withdraw funds from your 401k plan - This is a mighty tasty prospect when faced with financial stress. One statement from your 401k plan documenting a nice balance and you could be tempted to cash it all in to rescue yourself from debt. Don't do it! You will lose at least 40% of your investment and it will take years, if ever, to recapture those funds. Ask yourself if you would be willing to open a credit card account with a 40% interest rate. If the answer is no, don't steal from your 401k plan. (I would also say that this is true about the equity in your home - leave it alone).

3) Borrow from friends or family - This is a touchy subject for some of you but if you ever find yourself in our shoes, you will dearly regret having done this. In the case of our Bankruptcy, all of our creditors ultimately get repaid. However, all unsecured loans are dead last. Therefore, your family and friends will have to wait 4 or 5 years before seeing a penny of the money they loaned. This is sad, regrettable and preventable. Don't borrow from family or friends. Larry and I have adopted the same policy with our loved ones concerning making loans. If we want to help a friend or family, we'll give a gift and plan on never seeing the money again. It's far better to feel good about giving than resent the borrower when they can't pay you back.

4) Lease cars - This is another tempting offer that we happily accepted. Car companies LOVE leases. They are designed to make money over and over. You get the privelege of paying them a hefty fee to drive their car, only to return it to them at the end of the lease with nothing to show for it. And, if you are like 90% of the people that lease cars, you will exceed the allowable mileage plan or exceed acceptable wear and tear on the vehicle and be left with an unexpected balance at the return of the lease. We were wise enough to do this TWICE! The first time, we were offered to buy the car at the end of the lease (for 30% more than it was worth) and the second time, we were so upside down that we had to roll the balance in to a new car purchase! We are STILL paying for that originally leased vehicle as part of our Bankruptcy plan.

5) Put off paying your taxes - This is not as likely for those of you who have your taxes taken out by your employers. However, for the self-employed this is another area for potential danger. Pay your quarterly returns - EACH QUARTER. IRS debt was what ultimately buried us. They don't mess around with penalties, fines and interest rates. And, contrary to what you may hear, they are not likely to negotiate with you. By the time we filed for Bankruptcy, our minimum payments to the IRS resulted in the principal balance INCREASING each month. We ran an amortization calculation on the IRS debt and at age 96, we were still in debt to them. It was evident that we would never catch up.

6) Accept introductory 0% offers for credit - This is a trap and one that millions of Americans step in to on a daily basis. The reason that these offers are so popular is that the majority of people don't comply with the terms of the offer and end up with a large interest rate and fat balance. Another creditor in our Bankruptcy plan is the result of one of these offers. We purchased a bed six years ago as part of one of these offers with the intent to pay it off before the rate changed. As circumstances arose, we were unable to do it. For five years, we are sleeping on that mistake and probably will for the next 20! We also learned the nasty trick of creditors that is played when you are late on a payment or you exceed your balance. Once that creditor raises your interest rate, the credit reporting agency notifies all creditors and, in turn, they all raise your rates. Unless you have money set aside to pay off that 0% introductory rate card before the promotion expires, don't do it. In fact, we have adopted the belief that we are all better off without credit cards at all.

7) Finally, and probably most important, living without a budget - the best analogy I can give here is starting a trip without a destination in mind. You'll drive for days and never arrive! The time you invest in preparing a well thought out and prayed over budget (and sticking to it) will save you years of pain and stress. Read my earlier blog on Freedom Accounts for one idea as to how one plan really works. There are many out there to choose from - the point is chose one and stick with it.

Our confession to you is that we always believed life would continue as it had. We were both very high income earners, talented in our professions and living in an economically strong environment. We had bought the lie 'it really was all about us and we DESERVED to be happy'. It didn't take long for us to learn that by continually seeking what we 'deserved', we were absolutely miserable.

Tomorrow's blog will discuss the seven debt recovery options available for those of you who followed our pattern of mistakes including; Debt Settlement, Debt Consolidation, Credit Counseling, Bankruptcy and more.

See you tomorrow!

Extreme Home Makeover - Trailer House Edition, Part I

Only the most fortunate of men waltz through life without a honeydo list. I'm not one of them.

For years, I made my weekly trek to Mecca - Home Depot or Lowe's on Saturday morning (right after Starbucks) was the norm, not the exception. And I'd drop $100 or $200 without batting an eye. Well, no more.

We hadn't been in our (trailer) house a week - a few boxes still unpacked, towels stacked on the bathroom counter - you know the drill. Magically, a fresh honeydo list appeared on my desk. Item No 1. Dishwasher.

God forbid that my wife should wash dishes - after all, its 2009! Off to Home Depot? NO - Say it ain't so! Craigslist is the game for me. I found a barely-used, top o' the line Kenmore dishwasher for $100. After a quick inspection I discovered it came out of a white collar office space. Bam! $100 bucks later, and I'm on my way home with a (sort of) new dishwasher for the lucky wife!

(PS - I did stop by Home Depot and pick up a new Insinkerator - to surprise Jan ).

To save money on honeydo lists, you've got to be a bit creative and a bit constructive.

TASK #1: Remove one set of cupboards and adjust side boards. Cost: ZERO.

TASK #2: Hook up new plumbing and In-sink-erator. Cost: $27 + 79 = $96

TASK #3: Hook up wiring. Here's where it gets tricky. I'm pretty handy, but frankly, electricity scares the crap out of me, ever since I plugged in the Christmas tree when I was 9, and my index finger was caught between the two prongs on the plugin - the shock of my life :-). The gal in Electrical at Home Depot was great - but her electrical drawing sucked - it was wrong. I went back three times, then finally drew my own after doing some serious research on the Internet. I happened to return to Home Depot when she was on duty, and she said, "Boy, am I glad to see you!" Turns out, her husband is an electrical contractor, and she got him to draw up a diagram - which agreed with mine perfectly. No shocks this time! Cost: $54

I spent 2 days, $252 installing my new dishwasher and IN-Sink-Erator. I saved about $400 in labor by doing this myself.

Watching my wife load the dishwasher, then plop down beside me to watch Extreme Home Edition while the dishwasher did its thing: PRICELESS.

MasterCard and Visa - Who needs 'em?

Cutting Costs: Part II

Larry's last blog indicated that we cut our housing expenses by $1000/ month by thinking out of the box and considering the unthinkable.


This has not been easy and it has not always been met with the best of attitudes. However, it is the best thing we have ever done for ourselves. We now love living this way. It's become somewhat of a game to see how much of 'our' money we can keep each month.


So, here's the continued list of specific ways we've cut our living expenses! Thanks to those of you who have shared your success stories. I invite you to post your comments here so that others can benefit by your tips.



Dining Out
It's hard for me to imagine but this is an area that was most convicting to us when we looked back on our past spending habits. When we were both earning good income, we didn't think twice about spending as much as $2000 in ONE month dining out (that is really sick)! We lived in the highest cost of living areas and we only ate at five star establishments - did I mention we were also snobs? We used to eat at Anthony's Fireside Grill in Olympia - average bill was $100. We still go to Anthony's but we eat for $10 or $20 by eating off of the Happy Hour menu.


I'm happy to report that we now spend less than $100/month dining out. The savings is HUGE on this one but it's difficult to quantify because we gradually lowered that amount month over month based on necessity.


Now that I'm staying home from work, I get a thrill out of preparing wonderful meals three times a day. We're saving money AND spending more time together. We've got a fabulous patio in our back yard which makes for the best of settings in all of Deschutes County!


I've mentioned previously that the primary ways we accomplish the most significant savings is to share meals when we do go out, eat at one of the local restaurants offering a Happy Hour, avoid expensive drinks & dessert and limit the number of times we go out. More often than not, if we want to get out of the house, we go to our favorite fast food restaurant Taco Time. Taco Time? Where's the wine list, the ambiance?


Taco's are $1.00 and they provide free chips and salsa. With a shared drink, our total bill is $5.85.
Conservative savings: $200/month


Groceries
We've also managed to cut our grocery expenditures immensely. This is the most time consuming area but the gains are incredible. I've subscribed to Fred Meyer's weekly email and they send me their coupons and advertised specials (I believe most large chains do this). They also have an online grocery shopping list that you can build from their advertised specials and then add your own items. I'll watch other circulars for advertised specials on other items we commonly eat and will shop at those stores if the price is better and the gas expense to get there doesn't prohibit it.


I stick to my list when I shop - no splurging and no unplanned purchases. I buy whatever is on sale - regardless of brand name (this was huge for me). Finally, I buy all of my non-food items at either the Dollar Store or Grocery Outlet. The Dollar store sells laundry detergent, dishwasher detergent, soap and more. These are huge savings. I shop once a week and have an allocated amount that I cannot exceed, based upon my Freedom Account. We used to think that by shopping at Costco, we would save. What we found was that with only two of us, it actually cost more because inevitably the food would spoil before we could eat it. Winco, on the other hand, provides smaller portions at a great price. (Keep your eyes open for the places restauranteur's shop - these can be great finds). 


Finally, we have committed to eating healthier - which means no pre-packaged or prepared foods. Larry has diabetes so we avoid most carbohydrates and stick to lean meats and wonderful vegetables. Our doctor recommended the South Beach Diet as a way of life for both of us. In the past three months, I've lost 22 pounds and Larry has lost 12. Most significantly is the changes in his blood sugar levels. Since we started South Beach, they have decreased close to 100 points! This takes him out of the danger zone in to a pretty 'normal' zone. WOW!


We eat only fresh ingredients that we prepare with our own hands. It tastes better, it saves money and it has the potential to sustain our health for years to come!


Savings: $100/month


Clothing/Shopping Sprees
Monies for these trips are part of a Freedom Account so it limits what I can buy. However, when I do shop - it's premeditated. Before leaving the house, I scan my closet to make sure that I don't already have a white blouse and if I do but I don't want it any more, it must go to Goodwill before I can go buy a new one.


Secondly, my first place to shop is thrift or consignment stores. They carry all of the brand names and high end fashion designers that Nordstrom's and others offer at savings of 80-90%. My last purchase was a pair of (never worn) Cole Haan shoes. I paid $7.00 for them. They are currently listed on the Cole Haan website for $185.00. Once you spend a day at the Goodwill or any consignment store, you will be struck with the amount of waste that we spend on clothes that mean nothing to us once they get home. It's a real eye opener and one that takes a while to sink it until it inevitably changes your heart about wasteful spending. I recently went through my closet to find 100 pairs of shoes. I've whittled it down to five, and now I wonder why I need five pairs of shoes. Last time I checked, I only had two feet!


Savings: $100/month


Gift Giving/aka Christmas
Those of you who know me know that I love to give gifts - big gifts! Every year my kids were accustomed to me trumping last years gift. As an example, one year we bought Chris a stereo system as his music interests increased. The following year, it was a very expensive Drum Set. It became a ridiculous exercise and there comes a point where you just can't trump the prior year!


We re-evaluated the reason behind gift giving and our true intent to show love in more practical ways. We've decided to adopt Larry's mom holiday gift giving plan when her family started to grow and the cost of giving to everyone became prohibitive. What we do now is allocate whatever funds are available for holiday gift giving and send it all to one family (based on a drawing of names). This way, each of our kids families has a turn to be blessed and it is something that they look forward to rather than getting a gift that they don't want or need.


Because we're not complete Grinch's, we still buy a small gift for each of our grandkids (we'll do that until their teen years).


Home Building/Home Maintenance
Some of you have been following our home building projects in our new place. Larry will be writing detailed plans on our blog to speak to each of these projects so watch for those. This has been the largest overall savings and shift in perspective we have experienced. We have committed to considering alternative building methods with each project.


To accomplish this, we have found Craiglist and yard and estate sales HUGE for us - not to mention the willingness to rely on the generosity of friends. (When you live a long life of self-sufficiency and having enough money to take care of you and your own, accepting the kind acts of others is terribly hard to do. We've had a lot of growing we had to do in this area but we've found that accepting the kind acts of others blesses them as much as it does you.)


When searching for alternative and/or free items, Craigslist has a 'free' category and I have created an RSS feed to that link. This way I get emailed every time there is a new posting. If the posting has ANYTHING to do with construction, we consider picking it up. If we don't use it, we turn around and sell it on Craigslist for a profit.


Larry will be writing extensively about some of our incredible finds and the results of these building projects. It just tickles us to see what we can do for free or very little money!


Today we make less than we ever have in our marriage, by about 40%, yet we have more freedom than we have ever had. I am no longer working and yet we now have room to put money in our Freedom Account each month. We are far better off financially, mentally, physically and spiritually than at any other time in our life. It's the craziest thing.


We always thought, 'only if we made a little more money, we could...'. We now know that it's not what you make but how you spend and save what you have that counts.

How Do I STOP Spending Money!?!?!

I just hung up the phone after having a gut wrenching conversation with my daughter. She is earnestly seeking solutions to battle the hold that the allure of credit holds over her life. "It's so convenient", "I intend to pay it off before the bill arrives", "I'm using someone else's money for a short while". The list goes on and on and she gets deeper and deeper in debt. She knows that this thinking never works because she's paid her cards off in the past and committed to never using them again, yet here she is once again. (By the way, I asked her permission to share this conversation because, she too, is working hard to change her habits.)


This next blog will be in two parts because Larry said I talk too much! OK, he didn't really say that but the tips we are about to provide is a lengthy list and we're hoping you'll digest each of the ideas and see if there are one or more that you can do today! Will you do us a favor and share whether or not you have committed to trying one of these ideas? You can use the comments box below or email us at catpawnderings@gmail.com. Thank you!


Some of you have asked for specifics on what we did to cut our costs by 75%. While the lists are not inclusive, they will provide a good idea as to where we started.  You may look at this list and say, 'Not for me!' And you'll be right.  If you can't, don't, or won't change, neither will your finances.  Remember the definition of crazy: "Doing the same things and expecting different results." 


PART ONE - Cutting Costs

Cell Phone
We had always been on a family plan with our provider and when I reviewed what it covered, there were numerous advantages we did not use. Therefore, we changed to lowest plan possible. Most carriers do not charge to change your plan provided you stay within the original term of contract. 

Savings: $20.00/month

Home Phone
We haven't had a land line phone for years now. However, we were still paying for a digital plan through one of the VOIP (voice over internet) providers. While this was only $24 a month, it was still something we could eliminate by moving to Skype. We now pay $2.95/month and we can call anywhere in the world for free. To this date, we haven't dropped a call and no one has complained that they can't hear us. It's a great deal! There are several providers like Skype, we just happened to have chosen them. 

Savings: $21/month

Cable TV
TV has become not only a babysitter for many kids, but it has also become the drug of choice for many adults. Larry and I were in the group of addicted watchers and decided that this would be something that would benefit us on all levels by limiting our options. Therefore, we went to lowest plan possible - most of the shows we watch are on the major networks anyway so this wasn't too much of an adjustment. Plus, we have decided to fill our TV time with walking or bike riding time - healthier mentally and physically 

Savings: $40.00/month

Gasoline
We had started sharing a car when we moved to Bend. We didn't want (or need) the extra car payment and we wanted to see if we could make telecommuting work. I'm happy to say that while I was working, it worked flawlessly. Now that I'm home, it's even easier. We've now decided that if the destination is within a 2 mile radius of our home, we will walk or ride our bikes. This has been huge. We used to fill up three times a month. We make it on about 1.5 tanks a month now. 

Also, when you read about my grocery expenses, you'll learn that we've started shopping at Fred Meyer where they offer a .10 off per gallon per $100 that you spend. This provides us with the discounted fill-ups per month. Outstanding! Also, public transportation is huge in most cities and is structured so that you can conduct your life without much interference. Give it a try! 

Savings: $120/month

Utilities
By moving in to a smaller house all of our utilities have gone down - less heat, less water, less irrigating outside, etc. Additionally, I contacted all of our public utility companies and asked if they provided monthly billing based on prior year averages. Good news! This not only lowered my monthly amount but allows me to budget for these expenses monthly. 

Savings: $10/month

Medical Bills
If your employer offers the section 125 cafeteria plans - you can elect to contribute a percentage of your income to a (HSA) health spending account. Then, when you have medical expenses (or medical-related expenses) you can reimburse yourself with tax free dollars. This was a life saver for us with my unexpected bills. The money was put aside throughout the year and there for us to use. REMINDER: You must use all of these dollars in a calendar year or you lose them. Plan carefully. 

Savings: $65/month

Personal Expenses
This is one area that I fought long and hard but now that we've been doing it, I get much more enjoyment now than I ever did previously. So, before you cry out like I did, "I deserve some 'me' time" consider a couple of the simple things you can do. For example, I learned how to cut Larry's hair and now give him his regular trims. He learned how to do my pedicures. We now spend more time together - taking care of each other and we save money doing it! 

Savings: $55/month

We hope that you have found one or more things that you are willing to try in order to start the process of living with less. I'll post Part II soon. We look forward to hearing from you! 

Jesus Loves Trailer Trash

When Jan first mentioned the craigslist posting of the trailer house, I was in a pretty mellow mood. I agreed to go take a look. My mood changed as we drove over. A trailer DUMP. White trash. What kind of people will I have to live around?  What will my family think? What will my friends think? What will I think, presuming I already know what everyone else thinks?

 

To my surprise, the trailer park looked like an Oregon State park - the best in the US.  Green, treed, a boulevard down one end, a beautiful pond, rock outcroppings, and flowers everwhere. To my surprise, the trailer house was adorable. To my surprise, I liked it - alot.

 

I believe, that for most of us, at least once in a lifetime we're faced with very difficult, life-altering decisions - and our future hangs in the balance. For me, this was it. I could continue to fake it financially, juggle bills like a Vegas act, live in quiet agony and force a smile around those I rubbed shoulders. Or, I could eliminate about $1000 a month in bills, make a modest investment in a home again, gain pride of ownership, and own up to my financial reality - all in one fell swoop.

 

I remember that Jan and I talked into the night. We talked serious. "Can we REALLY do this?"  "Will it REALLY pay off?" "My greatest fear is what people will think." We talked silly. "Jesus loves trailer trash". "Now, what IS a trailer house, really?" "So ... is it a trailer - or a mobile home?"

 

In the end, we decided to go for it. Moving into our trailer - warts and all (and there are plenty) - is the best choice we've made in years. We've gained peace of mind and we will save at least $60,000 in the next five years. And thats alot of money from where we're standing. 

 

I want to encourage those of you faced with one of these life-altering decisions. Be honest and open with yourself and your mate. Care enough about the two of you that you really listen to the pros and cons put forth, and do right by both of you. Look for consensus, not for 51% of the vote.  Make the decision you not only think is best, but you sense is best, in your heart and your soul, and make it with certainty, faith, and conviction.  By the way, Jesus really does love trailer trash.

The Ole' Gray Mare Just Ain't What She Used To Be...

So, who wrote that song and how is it that it's more commonly associated with aging women than horses? Just the same, if the horse-shoe fits, wear it!

I mentioned that there were events about to take place in our lives that made our choice to move in to a single wide trailer a brilliant move!

I'm going to chronicle the events in the form of a journal so as to help unfold our crisis as it actually occurred. However, before doing so, I want to note that I had been dealing with health issues for awhile. I just didn't want to take the time to address them. I think I'm not alone as a woman. We tend to always come last and if you're a workaholic like I was your health is just one more thing to put aside until you have time to deal with it!

During the past 10 years I held positions as an Executive Recruiter, which meant sitting at a desk in front of a computer. Once my headset was firmly attached, I didn't move for 10-12 hours a day. Given that I was at my heaviest weight during those 10 years, my body did not like the posture or the sedentary choice of occupations. With that said, here's the journal of events one week after moving in to the new trailer.

Day 1
Accepted new position that I was so excited about - working for a company that was retained by my former (and most loved) employer, Apple Computer. Job will pay me well, putting us well on to the road to financial recovery (especially with the new $200/month mortgage we just acquired). Start new role with same company in two weeks (Day 14).

Day 2
Wake up in the morning and left arm has no feelings from top of neck to tip of fingers. Hmmm. Assume I've slept on it wrong, will see how it does over the next couple of days.

Day 3
In the middle of teaching a class of 25 students how to use a computer, lose vision in left eye. Not good. Tell peer instructor, who suggests I might be having a stroke. Go to primary care physician who orders two referrals. One to Opthamologist and one to lab for MRI. Future MRI's have already been scheduled for my back (one of the fall out's of sitting in a chair for 10 years)!

Opthamologist reports eye is fine - having an Ocular Migraine -wonderful! Wait until tomorrow for MRI results.

Day 4
Doctor calls with MRI results. Neck has some bulging discs but not ones to suggest numbing in arm. Will check up on those discs at later date. HOWEVER, MRI shows something on lungs. Need to go back for Chest X-ray.

Day 5
Doctor calls same day as Chest X-Ray. Definitely something on my lungs - lumps. Lots of them. Without wanting to worry me, wants me to know lumps are likely a) Lymphoma b) Sarcoids. He encourages me that if it's Lymphoma, it's the cancer of choice - easy to treat. Have NO idea what the heck Sarcoids are - still not clear after he explains but I opt for Sarcoids. Doctor needs a CT Scan.

Day 6
Doctor calls with results from CT Scan. Numerous lumps - need to see Pulmonary doc and get breathing assessment (plethysmograph) to see if lumps are causing breathing limitations.

Day 8
Meet with Pulmonary doc - recommends that he do a Broncoscopy (Gagoscopy) - lump biopsy. Plethysmograph indicates breathing is not impaired.

Day 9
It hits me - what if it's cancer? I spend the day deciding whether I'm doing ok or not doing well at all. Larry and I have serious conversations about how we feel about this process and the pending results. On this day a dear friend of mine, who has no idea what I'm going through, tells me she's doing a study called "One Month To Live" - Great! I'm compelled to go buy the book - just in case. By the way, this is an INCREDIBLE book even if you're not facing a life-threatening illness. I credit this book with changing my perspective on life and how to live it. Go get it!

In my broad range of thoughts, I finally came to the realization that I had reached this point in my life without ever asking myself if I was having fun. My body hurt every day. I was wound up like an eight day clock and I didn't have one hobby that I could recall - not one. I had given up playing the guitar in high school - the one thing I really enjoyed. I didn't write anymore and I had relationships with friends that consisted of a VERY occasional phone call or on even rarer occasions, lunch. Frankly, I have been a bit jealous of my husband Larry who knows how to live and love life - too many hobbies to count!

After much discussion and time on our knees, Larry and I decided that regardless of the outcome of the results, somethings were going to change. Would it be possible with the new house for me to actually not return to work and just focus on getting well? Not just physically but mentally and spiritually? We pondered that question for days.

Day 12
Broncoscopy. If you look this up in the dictionary it says, "DON'T DO IT"! This is where they drill a hose down your throat and in to your chest cavity to pick off a sample for biopsy. Oh sure, they medicate you. In my case, the meds didn't work so I gagged, choked and cried for the entire procedure. If you ever have this done - ask them to knock you out!

The biopsy was done on a Thursday and we would have to wait until Monday for the results. Monday is the same day I start my new job. We decide that regardless of the results, I'm not going back to work. We'll do whatever we can to make the finances work so that I can heal.

Day 14
Graciously, the doctor called first thing in the morning to tell me that I have Sarcoidosis. I've included a link for those of you unfamiliar with the disease,  www.nhlbi.nih.gov/health/dci/Diseases/sarc/sar_whatis.html. The upside of this disease in my case is that with the extent of the lumps, I've probably had it for years and have lived symptom free. Therefore, I'm likely to live a life symptom free. I'll get checked every six months to make sure that I am in remission. We are so thankful it wasn't Lymphoma and that it is something that is treatable.

I've taken the time to share this journal with you for a couple of reasons. Both of them are directly tied to my previous writings pertaining to our financial journey.

1) From a worldly perspective, one never knows what lies around the corner that may de-rail your best efforts; the loss of a job, the loss of a spouse, a down economy or health issues. To the extent that you have a solid plan in place to prepare you for whatever may come (and it will come), you can withstand the worst of these events. While we didn't know that these events were coming, the fact that we had submitted to buying a house lower than our 'standards' and lowering our cost of living by 70%, we were able to act according to what was best for us.

2) From a spiritual perspective and probably the one that has created the greatest change in my life, we're not in control as much as we like to think we are. God really does have a plan and to the extent that we are willing to yield to those plans, life works. To the extent that we fight Him and attempt to do it our way, life can be really tough. Despite my best efforts to do it all on my own, I lived a pretty chaotic life.

I'm happy to say that I am fully yielded to God's plan for my life and the result is that my life is calmer, sweeter and much more adventurous. While I don't always 'like' where He is taking me, I trust Him and have found Him to be faithful, gentle and mindful of me each step of the way.