How We Ended Up Over $300,000 In Debt

You’ve found us! I should start from the beginning. When we were both in first year university we, like many students, were offered a credit card. A really pretty one with a picture of our campus on it. It was great, personalized just for us, sign us up! And so it began…

Her Story:

I wanted to go to university, actually it wasn’t an option, I was going to university, I just didn’t have any money to pay for it. I grew up in a single parent household and although my mom had a great healthcare profession she either didn’t think about it or didn’t have the money to regularly contribute to RESPs for my sister and I. When the time came for post secondary every single penny went on some form of credit, be it line of credit, student loan or credit cards. I had a part time job but not enough to pay for anything more than my books (which, lets be honest is a huge chunk of money in itself). By the end of my undergraduate degree I managed to rack up $32,000 in student debt and probably $2,000 in consumer/credit card debt. By the age of 21, I had $34,000 debt.

What’s even worse is that, although no education is wasted, my degree wasn’t going to get me much beyond a minimum wage job, the only option I had was to further my education. Back to school I went and although I have  a great career now, and zero regret, by the end of my second degree I managed to add another $15,000 in student loans, another $10,000 in lines of credit and about $13,000 on…credit cards…Yup. I put over $10,000 on credit cards to pay off tuition and books that my loans/LOC’s wouldn’t cover. My program was over $13,000/year, not including books and other incidentals and maintaining a part time job while in this program was not optional. I couldn’t do both and focusing on my overpriced education was priority. I should mention that as of a few years ago you’re no longer allowed to pay for your tuition with credit cards at this particular university. Too late for me. By the end of my second degree, before my life had started, I now had $106,000 in DEBT. ONEHUNDREDANDSIXTHOUSANDDOLLARS!!!! {Vomit}.

His Story:

His story is a lot less scary. Hubby went to university, then collage, racking up a total of about $10,000 total in line of credit and student loan debt. He has a credit card maxed at $2,000, not a huge deal. Then he went and married me and my $106,000 deficit bank account, he must really love me!

Our Story:

To top off my $13,000 in ‘school credit card’ debt, his $2,000 credit card, together we also owe another approximate $5,000 in various credit that we can’t really account for. We have a vehicle loan together, outstanding at approximately $29,000 and a mortgage currently outstanding at about $233,000. We both have good careers but, especially now that we have a baby (and I’m on maternity leave) extra funds for additional payments beyond the minimum for credit cards is near impossible. We have applied for consolidation loans twice for the credit cards and were denied twice because, surprise, surprise our debt ratio is too high.

After years of making minimum only payments, getting no where and being denied the consolidation loans we investigated credit counselling and starting a debt management program(DMP). We’re now in the process of starting with them and paying off our unsecured debt (all credit cards and one line of credit) totaling approximately $24,000, making no additional payments it will take us 54 months to pay off and complete stage one of our debt freedom plan. Our goal is to be finished with the DMP in 36 months. We want to throw every addition penny/tax refund and added income month and cut 18 months off our term. I think we can do it through proper budgeting. Once the DMP is complete we’ll tackle our other debts individually. I will be making up a plan to share once everything is well established with the DMP.

I will add that we have in the last three years paid off three credit cards ourselves that I didn’t add in the above detail and paid thousands off our lines of credit and student loans so they’re currently not sitting at their maxed limit, although still quite high.

Update Note (2018), honestly, looking back on this I’m thinking that one thing I probably would have considered is doing more for my family.  We’re pretty much out of debt now and as part of the process I might have focused less on what I was doing and more about how I could help others.  For example, I’m thinking about getting insurance for my parents to be sure they don’t run into problems with health in their old age.  Medicare and social security just don’t cut it for a lot of people, so I’m looking in getting a supplemental medicare policy.

Join us on this long journey to freedom and no longer worrying about money!

Children and Post Secondary: Why We Might Not Pay For All Of It

Knowing the financial mess one can end up in from not having a savings plan for post secondary education first hand, hubby and I opened a RESP for our daughter when she was 5 weeks old. I remember the representative going through the projected education costs for when she’s ready to graduate and was blown away. How can universities justify such an insane inflation?

This week a local news story came out about the rising costs of tuition in Canada. Tuition has increased 5% this year alone. Holy Cow.

At this rate, when baby girl is ready for post secondary, in 18 or so years (should she chose university/undergraduate degree), we’re looking at over $12,000/year. That’s assuming she lives at home and hasn’t factored in books or any other added expenses.

Hubby and I have every intention of continuing regular monthly contributions, plus additional savings when she receives money as gifts and such, but we have no intention of stretching ourselves thin financially for her educational savings. When the time comes and have have more money for saving (vs debt payoff) investing as much money as possible into our own retirement savings is more important than throwing additional money into her RESP.

In a perfect world she gets a part time job when she turns 16 and learns the importance of saving for things that she wants, education included, but despite the finical mess I’m in, I have no problems with student loans and (student) lines of credit. Very rarely in life does the opportunity to borrow at such low interest rates come up, and with proper money management and budgeting skills could be a smart move. I truly believe that if there is some financial responsibility in your education it encourages you to work harder. For this reason if our savings isn’t enough to cover her I’m not going to worry about it. By the time she goes off for school she’s guaranteed to have learned good money management skills-a promise I make for her-and can properly manage a little credit in her name.

I have friends who insist on having enough savings for any and all education their child may pursue, even if they chose something like medicine or dentistry.

Just an FYI this year’s tuition costs for these programs:

Dentistry students paid the highest average undergraduate fees at $16,910. Medical students paid an average of $11,891 and pharmacy students paid $10,297.

Read it on Global News: Global Maritimes | Undergrad tuition up five per cent this year, more than triple inflation

At the 5% inflation we’re looking at almost $41,000/year for dentistry in 18 years…Just sayin’.

Maybe I’m a mean mom, or totally alone on this, but if we’re fortunate enough that our child can get through Medical or Dental school, I’m pretty sure they won’t have much problem paying off the degree, that’s for sure.

For those with children, who are saving for their post secondary education? Who is prepared to pay for 100% of it, regardless of academic pursuits?

 

How We Eat On $300.00/month- My Meal Planning Guide

I’m surprised by how many comments and e-mails I’ve received about how, and what, I eat for $300.00 a month. I’ve always loved cooking and finding recipies that can make inexpensive foods taste great so I will start posting some budget friendly recipes for anyone who is interested.  For now I will give an example of our meal plan/grocery trip.

I don’t worry about breakfast or lunch too much. We eat basic cereal or toast/bacon for breakfast and usually a sandwich/yogurt/fruit for lunch, I only worry about dinners.

I use a list very similar to this meal planner made by Life in Yellow (which you can download for free! so head on over to her site!)

 

Source

If I have meat in the freezer I will usually try and cook around that first. I had some pork loin chops left this week so one meal will include pork. Once I look through the freezer, I go to the weekly sales and see what meat is on sale. This week boneless/skinless chicken was on sale, as was oven roast so this will act as our starting point for meals. I always have ‘side staples’ on hand and buy as we run out  (long grain rice, potatoes (my favorite!), salad ingredients and frozen corn or broccoli). I only buy what I need for the week so if I’m out of rice but don’t include rice as a side for any of my dinners I won’t waste the $4.00 buying it this week if I’m not eating it until next. I don’t like to have money tied up in food.

In terms of chicken specifically, hubby and I share a chicken breast when cooking. I don’t know about where you live, but the size of the chicken breasts(and almost all meat for that matter) at our grocer are more than twice the recommended portion size for meat so 90% of the time I cut it it half. The exception being if we BBQ the breast then we tend to have our ‘own’ although we never finish them and the meat usually ends up in a salad for a lunch next day.

I plan meals and after looking through the cupboards and my recipe book, I only write down what we need (down to every tiny spice), if it’s not on my list I have it at home.

Meal 1: Sweet and Sour Pork Chops (with rice)

Need: 1 can of pineapple tidbits, cornstarch, 1 can of chicken stock 

Meal 2: Spicy Grilled Chicken Sandwiches (with fries)

Need: 1 Chicken breast, 2 buns, fries 

Meal 3: Grilled chicken salad (with garlic bread)

Need: 1 Chicken breast, salad kit, loaf of french bread

Meal 4: Dinner out with family-separate budget from grocery funds.

Meal 5: Greek Chicken Wraps (with my roasted potato)

Need: 1 Chicken breast, tortilla wraps, garlic/sea salt spice grinder

Meal 6: Chicken Divan (with rice)

Need: 2 Chicken breasts, broccoli 

Meal 7: Slow Cooker Roast  (with corn and mashed potato)

Need: Roast, 1 can cream of mushroom soup, bag of frozen corn.

Next I make my list adding the other necessities I need like milk. I also try and estimate the prices so I have a general idea before I go what I expect to spend at each store (I shop multiple stores chasing sales), so my grocery list will look like this:

Store #1:

-1 package B/S chicken (~$10.00)

-Milk ($3.50)

-Cereal ($2.50)

-Bread ($2.50)

-Salad Kit ($2.00)

-Tortilla Wraps ($2.00)

-Buns ($2.00)

-1 box of Kraft Dinner (Canadian staple, I love it!) (.65)

Total: appox $23.00

Store #2:

-3lb Oven Roast ($6.00)

-2 cans of soup ($2.50)

-pineapple ($1.50)

-Box of cornstarch ($3.00)

-French Bread ($1.50)

– Bag of frozen broccoli and corn ($2.00/each)

-Spice grinder($4.00)

-Fries ($3.00)

-Nutella (my weakness so only buy on sale) ($3.00)

-Chips ($2.50)

Total: approx $31.00

Store #3:

-Diet pop ($5.00+bottle depo $1.20)

-5lb bag of apple ($4.00)

-Bananas ($2.00)

-2x Granola bars ($2.00/box)

-Yogurt {This week a local grocer had a huge overstock of yogurt and was selling it for 0.25cents/4pack, Score!}

-Eggos ($2.00)

-Eggs ($2.00)

-Bacon ($4.00)

-Ketchup ($3.00)

Total: approx $22.00

Weekly Total: $83.00

Not included in my grocery money is cat food and cleaning supplies/TP. We budget for the cat food separately and I started setting aside a few dollars each week for TP and cleaning supplies since they’re so sporadic.

So there ya have it, an example of my weekly spending on food. Some weeks are more expensive when I run out of all ”basic” cooking stuff (always at the same time) but that’s usually only once every few weeks for stock ups. I try and keep my weekly spending between $65.00-$85.00.

I’m sure you’re all familiar with Canadian Budget Binder but if you’re not, check out his weekly grocery store challenge to see how other bloggers stick to their budgets!

How Losing $1500 in Monthly Income Changed Us For The Better

I’m currently on maternity leave. In Canada, through the Employment Insurance program (EI), you’re entitled to maternity and parental leave for a combined 52 weeks at the rate of 55% of your gross income to a maximum of $457.00/week. Some employers then give you top-up bringing you to 75-100% of your income, so for some, being on mat leave has little to no financial change. Not so much for us.

I work as a Dental Hygienist for a family practice. The dentist doesn’t provide top-up, one of the downsides of private industry. There are only a few employees and he needs to pay someone to fill my position while I’m off.

On EI I’m receiving $838.00 every two weeks. Pre-baby my net bi-weekly income was around $1500-1600 every 2 weeks (I’m paid hourly so it varies a little depending on my patients). That’s about $1500 a month in lost income. My question is, how the eff did we ever have money problems?

I’m so mad at myself when I think about how much money we were wasting rather than getting serious about our debt. It took us having a baby to really get serious about our budget and paying debt off. We always paid the minimum requirements but when I think about, what I now know we’re capable of, it sickens me.

Where the money was going…

-In all honesty we were probably spending $500/month in groceries throwing anything and everything in the cart when we went…for two people! Now we spend about $300/month and don’t want for much, we’re just much better at planning.

-Bank Fees we were spending between $30-50/month on bank fees. Since switching to PC we pay nothing. It’s great and we’re super happy with them.

-Eating out. This was huge…between hubby and I we were probably spending $300/month in lunch and dinners out. Mostly lunches when we, again, didn’t plan and would end up eating out at work. I’ve always cooked most all our dinners, we’d usually just have one dinner out-usually pizza or something when I didn’t feel like cooking Friday night after an exhausting week of work and long commutes. Now we budget for one meal out per week and we’ve been pretty good about sticking with it.

-Hobbies/Life/House. We have never been big shoppers/spenders on ourselves for clothes etc but I’d go to Michaels/Home Depot and drop some cash for my newest craft/DIY project. Hubby and I both love tinkering with house stuff and playing with tools. Not that I would consider this money wasted per se, we just cut it out entirely when I went off work.

How we’re managing…

-Given our huge debt load losing the $1500/month was really hurting us. Our minimum monthly debt payments alone were about $1500. A huge help was hubby getting a very generous and much needed raise, it was great timing.

-Starting the DMP and getting serious about budgeting and honestly, growing up when it comes to our spending habits. We now think about every dollar we spend. We were never really crazy racking up credit cards or spending beyond our means we just didn’t allocate the funds properly or responsibly.

-Paying interest only for my student loans. Of my debt, most of it is in the form of student lines of credit which offer no relief should you lose your job/mat leave etc. For government issued student loans, in Canada at least, you can apply for interest relief where the government makes payments on your behalf for a period of time, I didn’t qualify for this because I made too much money last year and they don’t take current financial situation (me being on mat leave) into consideration. I am however making interest only payments for the current time saving me about $180/month.

When I go back to work…

I will be working four instead of five days a week so I can be home with baby an extra day. I’d love to say me being home would save us money with the cost of childcare but it won’t. Daycare shouldn’t cost us more than $30-35/day and after taxes etc I bring home just over $160.00/day. Not to mention we simply couldn’t live off hubby’s income alone. I love my job and can’t wait to get back to seeing my patients and the routine work gives me but I also hate the idea of her being in daycare without me. We’re hoping hubby can work from home one day/week so she really only needs daycare 3days/week. Finding part-time care is a challenge though…

On top of the childcare expense we need to start buying bus passes for me which set us back about $80.00/month we only have the one vehicle and can’t justify the money for a second one when it would only be for me to drive to and from work which would cost probably $200/month in gas and another $200/month to park the stupid thing for the 8 hours I’m at work, no thanks. Public transportation is fine for me.

I do struggle slightly with giving up my one day/week. I desperately want to be home with baby girl. My mom worked so much when we were kids I hardly saw her and I knew when I had a family I would be home more and involved in her life more. A huge reason behind my career choice is that dentistry is usually a M-F, 9-5 type of job, important when it comes to family life. When I think about the extra debt I could pay off with me working that day though it kills me a little. In the end though I think she’ll only be young once and our parental influence is probably most important now. Once she’s in school full time and not care so much about her parents maybe I’ll go back 5 days…we’ll see!

When I started my mat leave and realized just how tough things were going to be we were panicked but in the end it was probably one of the best things that ever happened to us. It was the kick in the ass we really needed.

Honesty: Why Most Budgets Fail

This week was a good reminder about being honest with myself when doing up our budget. While I’m all ”gung-ho” about paying our debt off, I have to be realistic about our spending habits and life needs before throwing all our money at bills and debt.

When I started budgeting I went a little cutback crazy in order to find as much money as possible for debt repayment. I was happy with some savings we made by cutting back in necessary areas but then I started lying to myself by saying we wouldn’t need to budget for things like eating out because I saw it as an unnecessary expense. With me being on maternity leave (and subsequently losing about 55% of my take home pay) I’m as frugal as ever.

Even if money wasn’t an issue, hubby and I were never big spenders on clothes/beauty stuff/toys etc but before baby we did love to eat out/order in. While we have cut back significantly, me not budgeting any money is setting us up for budgeting failure. If I’m being honest, we will probably eat out once a week, whether it be grabbing a quick lunch while running errands with baby, picking up a pizza on the way home or *gasp* actually going out for dinner, there is a 99% chance one meal/week will not be cooked by me.

This week made me realize that if I’m not honest about how our money will actually get spent; at the end of the day/week/month I will be scrambling for changes in the budget to accommodate this little white lie.

To keep me honest, here is a list of things that despite what I may think, I know will spend money on eventually:

• Eating out once/week.
• Haircuts every 2 months.
• Clothes. We both need them before I go back to work in a few months, there is no realistic way to avoid this.
• Razor Blade. It may seem like a small item but it KILLS MY SOUL to fork out almost $20.00 for blades. I’ve used crappy ones but I can’t do it anymore. Having said this, I use every blade like it’s my last one-I haven’t changed it in like 3 months haha.
• Diet Pop. It’s mine and hubby’s weakness. I gave it up while pregnant and very much limit my consumption while breastfeeding but we have a serious love for diet Pepsi (me)/diet coke (him).
• Birthday present/Christmas presents for each other. In the past for Christmas hubby and I usually didn’t buy anything much for each other, rather buy something for the house or money towards a trip if applicable plus maybe do up a small sock. The fact remains if I don’t budget anything for us (to buy for each other) I know we will end up spending a few bucks on something for the other person; we do every year despite our intentions. Same with bday gifts, I can tell hubby a million times not to buy me anything but I know he will (as would I for him). It doesn’t have to be extravagant or expensive but every dollar needs to get accounted for.

I know there are probably more things I need to think about in terms of how my spending habits are then and re-account for them but these are some of my budget lies. I think I just need to budget in a weekly allowance for ourselves to account for stuff like the above mentioned (minus Christmas as we will be budgeting for annual gifts/Christmas separately).

How do you deal with keeping your budget on tract and honest?

Did My Education Fail Me?

I have two university degrees. I consider myself well educated and am grateful for the education I have received. Yet how is it that in all of my years of education (primary, secondary or post secondary)  I was never once taught a single thing about money or finances?

When I was in grade one, a local Credit Union came to our school every Friday where we would hand over our pennies from our piggy bank and they would deposit it into a bank account opened by them with permission of our parents. I had no concept of why I was giving the lady money, where it was going or when I would get it back. It took a lot of explanation from my mom, not my teacher or bank teller volunteer, for me to sort of understand bank accounts and savings. Even then, my six year old self didn’t really grasp it, nor did I care to- I was busy with my Barbie dolls and coloring books.

This is my only recollection of anything to do with money until high school where I was ‘taught’ how to file a basic income tax return. That is the total extent of money education.

I didn’t learn good budget skills until after I graduated with my second degree and had a boatload of debt and even then it still took a lot of mistake making before I got serious about it.

Don’t get me wrong, as a consumer there is an onus on me to go forth and educate myself before buying into a product (be in a credit card, student loan, mortgage) but at what point or age should that responsibility be put on one?

Should our teachers or education system have some responsibility to make sure we are equipped with some basic skills or knowledge before we’re tempted with those shiny credit cards when we come of age? Or is it our parents responsibility?

Some universities actually mandate a ‘basic life skills’ class in your first year where you’re taught money management, budgeting, or even how to do laundry. Why should students have to, at this point, PAY for this knowledge? Don’t get me wrong, I think it’s great that courses like this exist but not at the cost of one university course (hundreds of dollars).

By the end of my first year university I had two credit cards in my name with a total credit limit of $5,000, way too much money and temptation for a self confessed financially uneducated 19 year old.

Am I totally alone here? Were other people better educated in the area prior to high school graduation?

{For the record, out of curiosity I went to my local Credit Union when I was 16 and withdrew the $17.98 I had deposited 10 years earlier, and immediately spent it on something stupid like flavored lip gloss or lunch with friends}

How We Manage our Grocery Budget (No Coupons Involved!)

{Source}

For many families, the grocery store is an easy way to kill a budget in a matter of minutes. When we decided to get serious about our budget last month I was determined we could live of $75.00/week for groceries. I’m currently on maternity leave so other than tending to baby girl I have no commitments that should interfere with me preparing all our meals. I’ve always enjoyed cooking (although cooking under the stress of a crying baby who wakes mid meal is no fun) so for us it was more a matter of proper meal planning. Before last week, we were bad for deciding an hour before supper what to eat which more often than I’d like, ended up in ‘convenience cooking’ (ie ordering out, cooking an overpriced, pre-made, dinner from the grocery store etc).

Here are my tips for sticking to a grocery budget:

1. Meal Plan. This is huge. If you meal plan appropriately (down to every last spice that you may need) it will prevent you from running to the store for that ”one item” you forgot and subsequently end up spending $20.00 in crap you didn’t need or intend to buy.
2. Stick to your list. Don’t let your eyes wander away from it. This requires strength.
3. Shop the sales. If chicken is on sale this week, look for a few creative ways to cook it.
4. Shop weekly. We use to shop biweekly when we got paid but realistically planning two weeks worth of meals didn’t work for us (I personally found planning 14+meals difficult) and we would end up at the stores on our ”off week” anyway if there was a great sale, regardless if we had the money for the item in question. The other benefit is that produce is wasted less.
5. Cook with what you already have. If you have a fresh sauce/meat/produce item that might need to get eaten soon try and plan a meal around that item.
6. Don’t be a brand snob. I don’t know where I first heard the term brand snob but it makes sense. I mean honestly how many ways can you can tomatoes or make a bottle of ibuprofen, it’s all the same. There are a few exceptions to this rule and everyone will have their own list (I love my Heinz ketchup, Kraft peanut butter and hate cheap razor blades!). The other plus to trying store brand is that store stands behind their product offering money back guaranteed if you’re not satisfied with the product, no questions asked. Doesn’t hurt to try!
7. Shop around. Unless the cost of gas outweighs the deal(s) it usually pays to go to more than one store for the sales.
8. Check non-grocery stores for deals. A few ‘discount’ stores (Walmart, Target, Giant Tiger etc) that have grocery sections will often have good food sales.
9. Use your Farmer’s Market. If applicable, not all cities/towns have one. If you do, chances are the produce selection will be better than your grocer and better prices. Bonus, you’re supporting local farmers.
10. Grow your own food. I grew a few veggies this year and plan on expanding next summer when I have more time to dedicate to it.
11. Buy Frozen. I bought a bag of frozen corn for less than $2.00, it can act as a side to more than 10 meals for hubby and I, super yummy and taste better (and cheaper) than canned. Canned is good too.
12. Don’t buy (too much) bulk or items just because they’re on sale. I use to grocery shop sale items whether or not I needed them right now. Laundry soap might go on sale for a good price and I would buy it even though I had a months worth in my basement. I was tantalized by the sale price. I don’t do this anymore because I see it as tying up my money in items I don’t need right now. Sales always reoccur.
13. Cook your own food. If something is pre-packaged (ie frozen lasagna/pizza) that means someone else made it. If someone else can make it, so can you. For a whole lot less and a whole lot healthier. Google will become your friend. Use YouTube if you have to. Following recipes is easy.
14. Cook large batches in slow cooker. If you don’t have a slow cooker or have one and don’t use it. START. You can cook a huge amount of food, for cheap and the best part is no real cooking! I will share some of my favorite slow cooker/budget friendly recipes later as this is my favorite kitchen item (my Kitchenaid mixer is a close second though). Bonus is that most meals can be prepped and frozen ahead of time (you can even prep seasonal stuff for use later in the year) so all you have to do it pop it in when you wake and come home to cooked dinner! It’s a great tool.
15. Finally, Don’t shop hungry. Goes without saying. You will inevitably buy crap you don’t really want or need.

What are things that help you stick to your budget?

Kick Starting Our Budget: How We’re Saving $182.00 Each Month

When we decided to proceed with the DMP we really had to sit down and look at our budget. I knew there were areas we could be saving but just never bothered to put the effort in to do anything about it before now. These aren’t areas the affect everyone but here’s where we saw some savings with little to no effort:

• Changing our cat’s food. Our cat has a digestive issue and requires special food, however I knew we could get a similar product for less if I put the effort in to shopping around. Money Saved: $30.00/month
• Stop paying to life insurance on our individual lines of credit. God forbid something happens to one of us, our actual Life Insurance will be more than enough to cover the two LOC in question. Money Saved: $50.00/month (this shocked me actually).
• Changing our cable/phone/internet package details. Money Saved: $25.00/month
• Bank fees. Don’t even mention it, it makes me sick. We switched to no fee banking. Money Saved: $52.00/month. Yes, monthly.
• Hubby’s cell phone plan, Money Saved: $15.00/month
• Changing drug stores to one with lower dispensing fees, Money Saved: $10.00/month

For a grand total of $182.00/month in savings. Huge especially since it was wasted money anyway!