• Like a bad penny, debt always turns up…

    unless we change how we interact with money, of course!

    The Bad Penny is dedicated to two pursuits: getting out of debt and staying out of debt! It recognizes that frugality and caring for our planet go hand in hand, and that our unsatiated need for stuff is hurting us in so many ways.

    Easier said than done!


    I am not a finance professional. I write about the world as I know it, and my advice may not be the best course of action for you! Please seek qualified advice for your particular situation.

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A little extra money never hurts

This month, we find ourselves in a much better financial position. Our Ebay sales have been great and we’re moving a lot of product. This means that we’ve been able to pay all our credit card minimums and more just from that money. Previously, paying the minimums and a few hundred extra on our personal Citibank card was all we could manage, and it took almost the entire second paycheck we get each month. So for us, liquidating our business inventory and equipment has been a really wise move for us. It also means we’ll pay off the cards that much sooner.

Because our paycheck didn’t have to go completely towards bills, my husband and I splurged a little bit. Last Saturday we spent $100 to pay for a babysitter and a nice meal at a Hibachi restaurant – something we haven’t done in literally years. And since we haven’t had a night out alone in almost a year, it was well worth the unnecessary expense. Could we have done it cheaper? Probably. Would we have? Well, let’s just say I think the money was well spent!

The extra money coming in was also perfectly timed with the arrival of our bi-annual car insurance premiums, so that $330 will come painlessly out of the paycheck – painlessly in the fact that we don’t have to figure out how to come up with it! (And yes, our rates are very low. We got that rate – about $330 a year per car – due to not only our clean driving records, but a good credit score and the fact that we have our Homeowner’s insurance with the same company. Plus we live rurally, so rates are generally lower.)

We’ve been thinking about how to best take advantage of the fact that through our business, our credit cards are basically paying themselves. And we’ve decided that for the next couple of months, we’re going to put as much of that extra paycheck towards our emergency fund as possible, and build that up. We’re also increasing our grocery budget to $150 a month, especially because pregnancy has made me very hungry all the time. 🙂 To be honest, I’ve been working with a “don’t spend anything” or $100 budget for so long, I’m a bit overwhelmed by how much extra money I have this month to use for groceries!

To be honest, that is where there is a problem.  I’m realizing that the urge to spend – when I have the money – is still there.  I’ve improved – a lot – but it still worries me.  Today I’ve found myself thinking it would be fun to go shopping.  But the thing is, I don’t need anything.  If I go to the store today, without an immediate need, it is very likely I will find something I “need.”

I do have one suggestion that works for this – it helps to make a list of things you will need in the near future – light bulbs,  towels, etc – things you need but you keep putting off.  When you get that urge to shop and give in, go shop for the things you will need, rather than shopping just to browse.  That way you waste less money (only the fact that you might not buy on sale will cost you) and you buy a need rather than an impulse item.

The only thing I can think of is yarn for a baby blanket.  But I need to put that off until I know whether I should get pink or blue!


Money Marriage

I’ve read that one of the biggest challenges for any marriage or partnership is money. If you are married, that comes as no surprise! After all, money is one of those things that permeates nearly every aspect of our lives.

Even after being married seven-and-a-half years, my husband and I still fight about money – usually when one of us doesn’t like the way the other spent it! In fact, it is because of this that we’ve laid some ground rules I think are important for any couple:

1. Allowances. Each month we each get a portion of the paycheck for our own discretionary spending. We can spend it on anything we want, and the other person isn’t allowed to say a word about it. In the past we haven’t had much money, so it’s been $40 a month. Lately, we’ve had even less, so we are currently getting $20.

It’s not a lot of money, but it’s enough that we don’t feel deprived if we want to buy a soda when we’re out and about or more yarn for me!

2. The $50 rule. Any time we want to buy an item more than $50 out of the household budget, our rule is that we have to talk to the other person. There are some exceptions – if I’m buying a lot of groceries, for example. Or paying bills.

This has been very helpful to make sure both of us know what is being spent! In fact, it has come to the point that we discuss nearly every purchase that comes out of the family budget – groceries being the exception, again.

3. The 24-hour rule. Along with discussing expensive purchases, we buy very little without waiting 24 hours to do it. Many times, by not buying an item on impulse, we’ve saved money – we waited until the item went on sale, or we found a better price elsewhere. We’ve saved the most money when we’ve realized we didn’t really want to buy it after all!

4. Read contracts closely and be picky about wording. In the past couple years, we’ve had several companies who didn’t keep up with their end of the contract. One of these companies gave us a terribly written contract that we signed. When they didn’t do the work, it ended up costing us, although we did get about 60% of our money back. The rest is reflected as about $1000 in credit card debt, plus interest for the past 3 years. If we had refused the shoddy contract for a better one, we may have been able to get it all back.

There are other important considerations, too, that aren’t specifically rules for the household :

1. As young(er) adults, we realize we’re not going to have everything our parents have, and we don’t expect to. We have old appliances, old hand-me-down cars, and Walmart clothes. Our parents have spent years building up a quality wardrobe and maintaining their appliances so they’ll last. Not to mention they’ve been working in their fields for years, so they make a lot more than us!

We can’t expect right off the bat to maintain the same standard of living on well less than half of what one of them makes! (Incidentally, this was very hard for us to understand early in our marriage. Thankfully, we didn’t manage to run up debt then!)

2. We need to continually plan for the future – paying down our debt, saving for big ticket items (instead of charging them) and saving for retirement and college.

I’m sure there are more, but I can’t think of them right now. Anyone else have some ideas for this list?

An Explanation

There’s been a lot of concern and discussion on other boards about whether or not our family – 2 plus a toddler – be able to live on $100 a month for food. I think it might be good for me to explain some background information as well as how I can be so confident that we can stay within our budget and still eat healthy, nutritious meals.

First, this is only a reduction of about $50 from our current budget that we’ve had for over a year. Until recently, my husband was unemployed and we were living on savings.

Second, right now we have a well-stocked pantry that should last us about a month to two months if we don’t buy anything but staples. We have a good amount of frozen meat as well. So it’s entirely possible we could go under budget this coming month.

And finally, this is only a temporary budget. Our goal right now is to get our personal Citibank card paid off through snowballing and selling some larger items we have. Once that is done, we’ll look at our grocery budget again and determine what needs to change.

Some have expressed concerns that one cannot eat healthfully or enough on this budget – I want to assure you all that we will not risk our health. 🙂 Living thoughtfully and frugally means making sure our bodies stay healthy since medical bills are definitely not cheap! So if necessary, we will go to the food pantry, beg my parents for money for food, or simply pay less on our credit cards so we can raise our budget.

One last business post

Okay, I’ve talked the debt over with my husband. He and I both feel like getting this mess down on paper changes the way we feel about the debt – instead of being afraid to know and avoiding the issue, we are much more confident in our ability to pay down the debts. “There’s a light at the end of the tunnel” is how Brian described it.

So now it’s time to get a plan on paper. I’m writing it out for my own benefit, but also in the hope that it will help some of my readers (few as they are at the moment, I know that in the future others will look back at this post.)

First we need to look at our bills. Most of these are unchangeable, though we are considering switching from broadband internet to high speed, which would save about $25 a month. However, with as much work as I do on the internet, it would probably end up costing more in productivity, so we need to assess that before we actually do anything. We can’t get rid of our cell phones, since we’ve already gotten rid of our land line. And finally, if we give up our $9/month basic cable, we won’t get one single station without buying an antenna for our roof.

And one thing to note is that summer will be much less expensive than winter – right now we are paying more for electric heat, oil heat and firewood (yes, our house is very complicated. 🙂 ) and we have to pay someone to plow our long driveway, especially since we live in the snow belt of the snow belt. In summer, we’ll open windows for our air conditioning, the clothes are hung up outside, fresh veggies and fruits will be growing so we don’t have to buy them, and the driveway will remain clear – all for free!

What we have to pay monthly (some of these are semi-annual bills, so I’ve cost-averaged them for each month):

Mortgage: $750
Electricity: $120-$200 (these are winter costs. Summer bills are about half this, if not less.)
Cell Phones: $65
Internet/Basic Cable: $55
Firewood: $90 or so for 1/3 cord (this is based on our last experience with poorly seasoned wood. The next $90 batch may burn much longer and hotter, so we don’t have to use as much as fast.)
Trash pickup: $25
North Carolina trash and water services: $10
North Carolina Electricity: $10-$20 (the house is vacant.)
Plowing: $100/month from December to April.

Total (based on the highest amounts): $1215 a month.

Our guaranteed monthly income is $2068, plus any additional income I make from my side jobs or selling things online, and income from the business we own, which usually generates no less than $200. So I can probably guesstimate a monthly income of about $2400, to be on the safe side.

So we have $2400-$1215= $1185 a month to pay for seven categories of budgeted money: food, gas, home repair/improvement, savings, tithe/giving, allowances, and debt. We also generally give ourselves a monthly allowance of $40 a person, although it will be going down to $20 each for a while. It’s not much, but it’s enough for us to each have some cash to use for whatever we want (usually the coffee shop in town!) without having to justify it to anyone else. It really is a measure taken for our sanity!

Based on yesterday’s debt calculations, we will have to come up with $615 a month just to pay the minimums on our cards – at least right this instant. As we pay off or pay down cards, this number will change. This leaves us with ($1185-$615) = $570 for food, home repair/improvement, savings and tithe/giving. Here’s how I’ve sorted it out:

Tithe: $200 (approximately 10%)
Food: $100 (we’ll have to get creative, but this is good for right now since we have a well-stocked pantry.)
Gas: $100 (thank goodness we don’t drive very far or much!)
Allowances: $40
Home repair fund: $50 (this is to cover necessary repairs and improvements, like new blinds for our son’s room.)
Savings: $0 (this will go up in the future, and when we have extra money, part of it will go in here, but there’s no room in the budget for it right now.)
Total: $490
Left over: $80 – this will be put toward paying credit cards as well.

So that’s it – our rudimentary, but suitable, budget. I’m glad we threw away our credit cards when we did, because our budget would have become tighter and tighter. I’m already disappointed that we only have approximately $80 to put towards our debt above and beyond the minimum payments.

So what do we do now?
Obviously if we could eliminate some debt, we’ll have more flexibility with our budget in case of an emergency. Plus there’s always the added benefit of having less debt quickly! 🙂

We need to sell off some of the items we have laying around that we don’t use and planned to sell but never got around to it (we have an antique electric stove in our basement and a sailboat in our garage from the previous owners of our house, among other things.) We’ll put that money toward a credit card to pay it down quickly.

We will snowball our debts, which I will talk about in a future post. We also plan on snowflaking any small amounts of money we get into the debt, which is something I want to explore further in another near-future post. Until then, you can read the article I linked to – the woman who writes that blog is very much in the same situation as us.

We will also continue to try to save money through thrift, stewardship, and thoughtful living. This is why we tithe. It is hard to explain to someone who doesn’t tithe, but we do believe in supporting God’s workers in the world, so we won’t give up our dear child we’re sponsoring or giving money to our church, who uses it to support missionaries who build wells and schools. Time and time again we find we always have enough when we’re dedicated to giving 10% of our income to those who are less fortunate. You may not agree with me, and that’s fine. My point is that what we consider priorities when it comes to our money may be different from the people around us.

There’s so much I have to say! I’m having a hard time not typing it all out here! You’ll just have to keep reading. 🙂