My Week Of Huge Financial Mistakes

This was a bad week.

I made mistakes I’m not proud of but will never do again. Ever.

It all 100% stems from not having an emergency/life fund. This is something we’re working on but won’t have the extra funds to start this for a week or two.

Last week my husband was diagnosed with diabetes. Long story short, he never had a family doctor growing up-or one he liked I should say- so never went. I finally got him on with mine and our daughters, and the diagnosis came in, in 26years he’s never had blood work done until 2 weeks ago. His blood sugars are crazy high and the doctor thinks given his age and how uncontrolled they are he’s most likely had it his whole life but it went undiagnosed. Talk about scary. In hindsight is 100% explains pretty much everything that’s ever been wrong with him in the 10 years we’ve been together.

Welcome Mistake #1.

We get paid Monday at midnight. On Tuesday I get groceries, spending our weekly food budget. After hubby’s diagnosis we ended up back in the grocery store on the weekend to pick up a few more diabetic friendly foods (the man who skips breakfast now has to eat it and we didn’t have anything at home other than my cereal which he truly hates). We didn’t spend a whole lot (less than $25.00) but the fact is we didn’t have any room in the weekly spending budget to account for that. I have a slight contingency built in to our weekly monies (ie 20-30 bucks that’s not accounted for) but that was spent on the new prescriptions we had to pick up for him (Thank God we have insurance that covered 80-100% of everything or it would have cost us hundreds). Where did that 25.00 come from? Our billing account, the mistake being I full well knew our insurance was due to come out Monday. I took a gamble thinking our pay might get deposited before the withdraw happens. It didn’t.

Cost of mistake #1? $90.00 in NSF charges ($45 for house ins, $45 for car insurance) plus our insurance charges a fee of $25.00/claim so another $50.00 I seriously had ZERO idea NSF charges were so high, until this week I have never had one. So our $25.00 grocery trip actually cost us $165.00. I’m ashamed.

Mistake #2.

Hubby was put on insulin. When we went to the pharmacy to pick up his new prescription the pharmacist gave us a vial of insulin. We thought hubby was supposed to be on the pen-loaded cartridge insulin but due to some miscommunication between us and the pharmacist (he confused us greatly) we ended up leaving the pharmacy with the vial before checking with the doctor to confirm he wanted vial vs. cartridge. He wanted cartridge so we unnecessarily paid for the vial.

Even with insurance, the cost of this mistake: $14.52 vial prescription we can’t use, plus the new prescriptions, about $32.00…total cost of mistake #2 $46.52. Ugh.

Mistake #3

This really isn’t a huge mistake but may have lessened the blow of mistakes #1 and #2. Put too much gas in the car. I have a budget for weekly gas but put more than normal in this week thinking we would be going away this weekend with the family. We’re not going away now so ended up tying about $30.00 in gas money up, it’s probably less gas that we’ll need this coming week so will even out but that $30.00 would have come in handy.

Total of mistakes: $241.52 

I know people are sick of blog posts about emergency funds/savings but this is my personal blog about personal experiences and I’m just now seriously realizing the importance. Next pay, even if it’s $5.00 will be put into savings and NOT touched.

Here’s hoping for a better week next week. Happy Weekend 🙂

First Hand Experience: The Importance Of Rental Insurance

Before the Mr and I bought our house we had a sweet little one bedroom apartment we called home for two years. Quickly growing out of it and longing for a ‘space of our own’ we bought our current home but not before making good use of our rental insurance….

Hubby came home for lunch one day only to grab something for work; I was at work and not due home for a few hours. While he was walking down our hallway he noticed the floor outside our neighbors door was wet…so was the floor in front of ours…water was pouring out from under our door. Hubby’s first thought was that he’d left a tap on but when he opened the door he was greeted with a face full of steam, we had a hot water pipe explosion in the bedroom, underneath the exterior window.

The water had most likely been pouring out for hours. There was thousands of dollars’ worth of damage both to the apartment itself and our possessions. Thank God we had rental insurance. A quick phone call to our insurance company brought an adjuster in to assess the damage.

Did I mention it was 2 weeks before Christmas?

Yeah, it was great fun.

Our apartment was unlivable. They had to tear out walls, floors and dehumidify the place.

In case you didn’t catch that, it was two weeks before Christmas. Our tree was up, the presents were wrapped and decorations hung. The presents were under the tree, on the opposite side of the apartment so although they got wet, thankfully nothing was ruined but it was a huge pain in the butt to deal with.

Couldn’t say the same for the stuff in the bedroom. Pretty much everything was ruined, the bed, all bedding, TV, furniture, clothing, storage under bed, all had water damage and black silt all over it (from the inside of the pipe).

Our landlords were very accommodating and put us in another (furnished) unit while stuff was getting sorted out.

Upon inspection the welder said that the pipe broke due to a weak solder joint where the pipe had bent around a corner. The landlords seemed to agree and nothing else was ever said to us.

We were back in our apartment two days before Christmas, sleeping in our new bed! It was nice.

The threats didn’t start until after the holiday season.

The landlords approached us on behalf of the property owners sometime in January looking for damages.

Ummm WTF? Damages?!

Apparently, the property owners decided it was our fault the pipe broke because apparently we left the window open (in -10 degree Celsius weather none-the-less) and apparently we didn’t turn the heat on enough to move the water properly through the pipes?!

Ummm, Yeah. Ok.

They were after us for over $3000.00 in damages to pay for the flooring and dehumidification of the apartment (which, by the way was run out of our unit so was therefore added to our power bill…).

We said NO. It wasn’t our fault your pipe was a piece of crap and broke when we weren’t home, had a window open? Or didn’t turn the heat on?!

They didn’t care. The property management called us personally and told us ”Your credit rating will be affected if you don’t pay us because we will have to SUE you and court settlements ruin your credit rating”. I’m not kidding. Thank God again we have even half a brain to realize these are empty threats and completely untrue.

The point of my story is that a week before the flood happened I suggested to hubby we cancel our rental insurance and save the $18.00/month. I am so thankful my husband said no.

What was I thinking?

Our insurance reimbursed us for everything and then some (gave us monetary replacement value for stuff we considered to be crap) more than that, they dealt with the property management company after we called them to tell them about the threats we had received. Truthfully I don’t know what the end result ever was. We moved in August of the same year and although they kept our damage deposit (for ‘damages’ haha) I didn’t ask what ever came about with the situation I wanted to remove myself as much as I could and let the big boys deal with it.

The $360.00 we spent in renters insurance over the 20 months we lived there was probably the best $360.00 we’ve ever spent. It paid for itself 10x over in terms of item replacement and a million times over for dealing with the a-hole management company.

Moral of the story: Get rental insurance if you don’t already have it, it could be some of the best invested money ever spent should you require it.

Saving While In Debt

This is something I struggle with. There’s something almost oxymoronic about having money in a bank account when you owe so much money.

Our savings account is currently at $0.03, I kid you not. We’re just starting everything and have yet to make a deposit. September is our catch-up month before starting fresh in October with the debt management program. We will be contributing to savings but when our (minimum payment) debt load is about 23% of our monthly income I cannot justify the suggested 10% savings. It is simply not going to happen.

Here’s what I’m thinking:

5% I can do, but not monthly. Hubby and I are paid bi-weekly I will be using our ‘extra pay months’ to top up our menial monthly savings to an annual total of 5%. The ‘leftover’ money from the extra pays will be put into savings as well for irregular ‘life stuff’ such as oil changes, home repairs, vet appointments etc. Again, I have a hard time savings, say $50/month for ‘home repairs’ when I might only need $200 a year.  I would much rather just set money into a ‘life savings’ account to be used only when needed, if needed at all.

Which brings me to my second point, since this is money that will only be used, if needed, do I really need to distinguish between the 5% annual savings for rainy day/emergencies or just have one account for everything? I mean we’re not using the money unless needed so do I really need to separate the two? Should I take the 5% and invest it?

I’m having a hard time defining how I should be saving and where the money should go (TFSA? RRSP? Sav acct?) I just feel like, for now, we should work up to a few thousand in an account incase we have an emergency but maybe not commit the money into a RRSP/TFSA until we’re done with the DMP, at which point we will have more freedom in the budget to allocate to ‘proper savings’ (RRSP’s etc).

Any insight or tips about what works for you would be fantastic!

How I Saved Hundreds On Diapers

Easily put, I had a party.

{Source}

Hubby and are fairly nontraditional people in certain ways (we had a BBQ wedding for example) so when it came time for a baby shower we knew we both wanted to be there, why is it just for the ladies?

The party was held at the in-laws where all our friends and family (male and female) came over for an afternoon hangout. The ladies partook in a more traditional shower while the men hung out, drank beer and had a diaper party.

Basically the guys showed up and ‘showered’ hubby with a boatload of diapers in various sizes instead of baby gifts. Our daughter is 14 weeks (tomorrow!) and the only reason we’ve had to buy any diapers was because she was in the newborn size a lot longer than I thought (tiny little thing).

According to my calculation, we received over $500.00 in diapers that will take her, in my estimation, up to probably 9 months old, just a few weeks short of when I go back to work. HUGE financial help! I’ll take boxes of diapers over another toy any day!

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?

Why Credit Counselling Works For Us

Next month marks our first month in credit counselling (CCS). While not for every situation, it was our only real option. We chose to go with a local not-for profit agency and couldn’t be happier.

As I explained, we have a huge amount of credit card debt primarily because of my school (tuition etc), not that it matters how we ended up there, the fact remains we have about $23,000 in unsecured debt (not including my student loans, LOC’s or mortgage).

Here’s a breakdown of the debt we will be consolidating:

TYPE

BALANCE

MINIMUM MONTHLY PAYMENT

DMP PAYMENT

CREDIT CARD

8200

240.00

151.00

CREDIT CARD

5800

115.00

107.00

CREDIT CARD

1200

55.00

19.00

CREDIT CARD

2000

60.00

37.00

LINE OF CREDIT

5000

152.00

92.00

OVERDRAFT

500

9.00

TOTAL

$22,700

$622.00

$415.00

$622.00/ month in MINIMUM payments. Going NO WHERE.

Other student loan and LOC payments being about $660.00/month

Then we have mortgage,car loan, insurances, living expenses etc etc…

Needless to say with minimum payments at $622.00/month, an additional $660.00 in student debt payments/month, a $1300 mortgage payment every month…we have very little money at the end of the month to put towards actually paying the debt down. I will break our monthly budget down later but the fact is, we were bound to be in credit card debt for like 50 years.

We approached two banks about consolidation loans but were denied. We have too much credit in our names. They both came back and said we were doing well under our current financial situation (not missing payments etc) but that they couldn’t offer us  the loan. This does not make sense to me, well it does but com’on banks! We’re not asking for MORE credit we’re asking that you transfer and closeout the above mentioned creditors for your lower interest consolidation loan so we can actually get somewhere with payments!

Excuse the language but it pisses me off. Banks have no problem offering you the money in the first place but want nothing to do with you if you need help from them down the road.

In comes credit counselling. The$415.00/month goes directly on our principle balances. No more interest payments and the CCS takes care of everything for us. We give them our money and  they deal with all the creditors, huge relief.

We’re now on the right path. This works for us. The estimated repayment is 55 months but our goal is no longer than 36months. We’re planning to contribute more than required every month+income tax returns+extra pay months (we’re paid biweekly). I have it mapped out in my head but need to get it on paper to confirm we can do this but I think it’s possible.

With credit counselling our credit is tarnished (but not to the extent of bankruptcy). CCS is time in the program/repayment+2 years, so the faster we pay it off the faster those 2 lingering years can start then we’re all fresh and have restarted our credit rating.

Things are looking up for us. I’m sort of excited to be embarking on this!

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}