Thursday, February 02, 2012

No Money, Mo' Problems*

photo credit

I spend a lot of time worrying about money, talking about money, complaining about how broke I am, joking about living in a cardboard box... but very little time actually doing anything about my financial situation. Part of this is because I feel like there's not much I can do. I'm going to school full time and working as a teaching assistant, and I know that getting an additional part time job would defeat the purpose of being in an MFA program - that is, to spend all my spare time writing. And yet, with a wedding on the horizon and a bunch of credit cards floating around with increasing balances, something had to be done. Earlier this week, Nathan and I finally sat down and took a hard look at our finances. It wasn't pretty, but it was a big step in the right direction.

Credit card debt 

We each have a credit card and we each owe a lot on them. I consider all debt our debt (with the exception of student loans) because we used these cards for shared expenses, such as buying a new bed when we got to North Carolina, paying the bills while Nathan was job hunting, and purchasing more than a few bottles of wine (to help with the transition of starting over in a new place - very important). When we combined those totals, we were left with a number that was, quite frankly, terrifying.

Closer inspection revealed that my credit card has a 29.9% APR and Nathan's is only 11.9%. Even though my balance was lower, I was paying way more in interest each month. (This is something I probably should have realized much, much sooner, but ignorance is bliss - until you have to pay it back.) We decided to use our small amount of money in savings and pay off the bulk of my credit card immediately, since the interest I racked up each month really would soon surpass our savings. Our plan right now is to pay off my card completely in the next two or three months, and then begin making slow and steady payments on Nathan's card and bring that balance down to zero within two years. In the meantime, we're taking our credit cards out of our wallets and putting them in the lock box, using them only for future emergenices.

One checking account

For the last nine years, Nathan and I have maintained separate checking and savings accounts, with the exception of one joint savings account which usually hovered around $50, give or take. Each month, I would calculate all our expenses and split the total down the middle. He would give me his half of the money, I would put it into my account, and then I paid the bills. (I like being in charge of money.) This system worked well for us and we were one of those rare couples who almost never fought about money. It was great.

Now, however, things are different. We're bringing in so little money that we have to pay attention to every dollar we send out. Juggling multiple accounts was stressful and I was overdrafting on a monthly basis. We realized that it would be easier to combine accounts - maybe not forever, but definitely while our financial situation is so tenuous.

Since we still like our independence, we're only quasi-combining. Each month, we're going to put all our money (with the exception of $100 each, for personal incidentals) into a joint checking account, and we will use this money to pay the bills, buy the groceries, care for the dogs, and otherwise fund our lavish lifestyle (that was a joke). This is our first month with the new system and I hope it works. If not, I have no problem going back to our old system, as clunky as it was.

The simple life 

We've always been thrifty and frugal for the most part, but we're trying to be conscious of our spending and make the small changes necessary to avoid debt and save money. So far, we have decided to:
  • only go to the bar if it's someone's birthday or a special event, and drink only the cheapest of beers while there. 
  • host and attend more potlucks, house parties, and game board nights. Being broke doesn't mean we can't be social. 
  • eat all our meals at home. I have a bad habit of dragging Nathan to the Mellow Mushroom because it is a craving that cannot be tamed. Well, it's time to tame it. 
  • less expensive beer at home and more boxed wine. This one is easier for me than for Nathan. 
  • look for wedding venues in North Carolina in addition to Long Island. This is a big one and I'll write more about it later, but planning a long distance wedding has a lot of hidden expenses. Most of our guests will have to travel no matter what so it makes more sense to ask them to come to us. 
Basic stuff, but I'm hoping it adds up. I really don't like being in debt.

So that's the update on my sporadic Adventures in Debt series. The moral of this round is: know your credit card's APR, don't stick with money habits if they no longer make sense, and get married in a cheap place so you can spend more money on booze. I'll post a follow up next month and let you know how things are working out.

(*I actually went back and searched my archives to see if I had used this clever title before, and was shocked to see that I hadn't. Better late than never!)