by Hope
I have struggled with this next plan. I know focusing on my kids expenses flies in the face of all the personal finance recommendations. But I have to go with my priorities and thinking of my long term plan.
Several recommended after the computers were paid off that I tackle the credit card. Here’s why I’m not doing that…I roll the credit card every month. To me, this means, I am paying it off every month and then reusing it. It’s never paid off at one time, but I am paying no to very little interest because I pay so much toward it and then reuse it. Does that make sense? This puts it at a lower priority to me.
With that being said, the debt that is weighing on me is twofold: 1) ex-husbands debt with a minimum payment of $246 per month and 2) the kids activities and camp payments. I know #2 is completely by choice. But the kids, if you have been reading me for long, are my #1 priority, always!
The Costs
Currently, percentage wise, the kids costs overwhelm my budget, and I’m really starting to recognize that. Well, maybe not recognize, I have known that. But I’m starting to feel the weight of repercussions of that. (Some of us do have to learn the hard way, don’t we?) I am ready to get some of that weight off.
These are the debts/monthly costs I am ready to get rid of:
- Camp costs (6 weeks of camp) – balance $3,375
- Volleyball (season ends April) – balance $350
- Gymnastics (training through April) – $960
The Plan
- Gymnastics – typically I pay $240 per month for training. If I pay for this “semester” at one time, I get a 10% discount. That would save me almost $100, making the total $864. And I won’t have to think about it again until May when the costs will go down as we train less over the summer months. My goal is to pay this next week, and breathe a small sigh of relief.
- Volleyball – I am on a payment plan to pay $175 per month until paid in full, but I’m ready to be done with it. My goal is to pay the remaining balance on Feb. 9th (when the next payment is due) and be done with it. Another sigh of relief. (Princess dad did contribute $350 to the $1000 overall price tag.) I don’t think we will be doing this again. I believe she will opt to play a school sport after this now that that it an option.
- Camp – ugh! I am so excited for them to go to camp this summer. They are so excited. But the cost!!! This will be the LAST summer for summer camp for us. However, with my job situation, I hesitate to pay anymore towards this until I know my financial situation after February. But this will be my next priority. I want to pay it off and be done with it. Grateful that I can do it for them, but super relieved that we will be done with camp. (I do know that when I have grandkids, summer camp money is what I’m going to give every year! I can’t think of a better gift both for my grandkids and my kids.)
This plan will get me into February. I am continuing to pay the minimum on everything else, not acquiring any more debt and really focusing on not spending any money that is not absolutely necessary!
Do you have a financial plan in place for the new year? I would love to hear what you have prioritized this year.
Hope is a creative, solutions-focused business manager helping clients grow their business and work more efficiently by leveraging expertise in project management, digital marketing, & tech solutions. She’s recently become an empty nester as her 5 foster/adoptive kids have spread their wings. She lives with her 3 dogs in a small town in NE Georgia and prefers the mountains to the beaches any day. She struggles with the travel bug and is doing her best to help each of her kids as their finish schooling and become independent (but it’s hard!) She has run her own consulting company for almost twenty years! Hope began sharing her journey with the BAD community in the Spring of 2015 and feels like she has finally in a place to really focus on making wise financial decisions.
“And I won’t have to think about it again until May when the costs will go down as we train less over the summer months.” Maybe you shouldn’t wait that long to think about it. “I have to go with my priorities and thinking of my long term plan.” You might want to address a plan for expected May expenses/debt now, if you’re thinking of your long term plan. It has been my experience (and from watching your story, yours, as well) that when you delay action or planning, it allows chaos to reign. You might want to come up with a plan, now, in January, to budget for the expense that will be a priority for you in May. My point is this: you’re doing a lot of work addressing the current debt; but you expect different debt in a few short months…you state you want to think about the long term; but you are stuck in short term thinking….as long as you only look as far as the dashboard, a trip down the road will be fraught with possibility of disaster.
If you can’t pay the credit card in full every month you need to stop using it. I assume you are putting things on it for the rewards, but that’s only a good idea if you pay it in full every month.
I agree with the first comment about getting a budget ahead of time, instead of playing catch up later. After these are paid off, I would try to get a yearly budget and talk about the options with the kids, giving them choices. Although it would be nice to do them all, you really have to start thinking about your own long term financial position, especially with job uncertainty. Perhaps going to camp is more important, but playing Rec volleyball would be ok. OR, maybe travel VB is the most important and fewer weeks of camp are ok. Who is going to take care of you when you can’t?
I always budget out about 6 months. And I would have LOVED if rec sports were an option, they were in VA. However, where we live now, the options are really limited. But now that they are in the public schools, next year school sports will be an option and I anticipate travel volleyball will not be something we do.
You are right, my retirement savings is definitely something I need to start paying more attention too. While I am contributing to a 401K and have a comfortable EF, I will definitely need to prioritize that nest egg in the coming years.
Hope, if you always budget six months out, why did you say you won’t have to think about that expense till May? I find your communications contradictory and often confusing. Also, budgeting to start saving in May for an expense due in May is not proactive. Maybe it is your concept of “monthly budgeting” v. “saving for expenses” that keeps you scrambling to catch up. You seem to want to “handle” your debt in your own way, without considering suggestions, just repeating your point of view. I get you’ve had a rough year; but maybe time to reevaluate what you’re getting from this blog?
Unless you pay it off in full every month, your credit card will charge you interest on the average daily balance. It doesn’t matter that you make large payments to pay it down, unless you do that right after the purchase, because your average balance will be higher than the ending balance.
The interest might be more than you expect — because the way credit cards work is that your bill is typically due 3-4 weeks after the statement closes (so, on average, 5-6 weeks from the purchase). So if you use your credit card on a daily basis, receive the bill, and pay it a few days before the due date, you’re averaging 5-6 weeks of interest charges for everything you buy.
If you want to use your credit card, you need to pay it off in full every month to avoid interest charges.
I totally agree. After the comments on this post, I went back to evaluate this very thing on my credit card. In the last 9 months, I have only failed to pay it in full 3 times. Each of those times cost me approx. $60 in interest. That’s not a terrible number to me with all I’m juggling but certainly avoidable. I will definitely monitor more closely that I am paying in full by the pay dates to avoid even the $60 charge.
You will never change and you will never afford to pay your grandchildren’s summer camp fees because you will continue to make BAD DECISIONS. You do not listen to all of these individuals trying to give you great advice.
I also put all of my expenses on a credit card and pay it off in full each month. You’ll save yourself interest money if you can get into a cash position to pay full balance to zero and basically “reset”. After that, you will be able to pay the statement balance each month without incurring interest charges. It’s maybe not a huge dollar value, but everything adds up when you’re trying to save money.
Also, once you pay the kid’s activities in full, you’ll want to start paying the next session fees into a savings account. I have an account that is separate from my emergency fund account that I consider to be “savings to spend”. I track individual items in an excel spreadsheet, but then just keep one big pile of money that I contribute to each month and then raid when an expense comes due.
You are very right, Walnut. It would be ideal if I could get the credit card to a $0 balance and then just pay on it every time I use it. Perhaps that will be my next plan!
I also like the idea of a separate savings account for the kids expenses. I think what I really failed to communicate with this post is that the weight of these expenses is really starting to wear me down, and I’m really starting to see the need to cut them back. I know they are naturally going to cut back now with the opportunities offered by going to public school and them getting older. But I’m to the point, finally, I know, that I will start putting my foot down more. Not saying that I am going to make Gymnast quit gymnastics, but as soon as the competition season is over, we are going to take a break. That will give me a break financially and time wise and him some time to evaluate what he wants to do next year with all the sports options at school.
I’m happy to hear that you managed to get the computers paid off. You mention that you will be paying $175 and $864 respectively this month for the kids extra curricular activities. That is over $1000 in expenditures. That’s a pretty hefty chunk of change. I’m hoping you are being really careful with that reserve you put to the side for emergencies and are not having to dip into it to pay for maintaining extracurriculars or stuff like camp. Please make sure you sit down and think about what your budget is going to have to look like after February after the W2 is scheduled to end. It’s better to get the kids on board if there have to be cutbacks now then to promise them camp and have to yank it back.
I also have a question. What if Princess doesn’t want to quit volleyball(her sweatshirt picture was adorable but did not hint at someone who might be as easy about just joining a different team based on the saying)? How do you plan to break it to her that you can spend $240 a month on her brother but won’t spend $175 a month on her? As a past parent of teens I can tell you to be prepared because unfair is a word teens love to utilize-
Great points, cwaltz! My savings is NEVER touched. I’m not adding to it as diligently as I was for the first 6 months, but I have not touched it at all.
As for Princess and volleyball, with her now in school, she is very interested in playing on a school team. We hoped to do that when we moved here but Georgia would not hear of it. If we had moved to South Carolina, they would have welcomed her with open arms as a homeschooler. Hindsight! Anyways, I do not anticipate she will quit volleyball at all, but she will now have the opportunity to play on the school team.
As for the fairness question, the kids all know that I do what I can for each of them. While the cost difference is not always discussed, they know without a shadow of the doubt, that if they want to try it, I will make it happen. Thanks to bartering, negotiating and careful planning, all of them are treated fairly…just differently because they all have different interests and styles. I don’t think that will be a conversation we will have. *crossing fingers
Amen to those who remarked on your credit card bill. The interest you are paying is clearly itemized on your monthly statement. That’s how much interest you are paying by running a balance. I’ll bet that number is a lot higher than zero.
Jean,
In the last 9 months, I have paid a total of $180 in credit card interest. (I went back to look after the comments.) There were 3 months when I did not pay it in full. That is something I can avoid.
Lose that credit card. On this financial journey, that should have been one of the first things to go.
While I can appreciate that perspective, I will NEVER be without a credit card again. I did that.
My checking account has been compromised and cleared one too many times for me to be comfortable with using my debit card anymore.
With all the travel we do, the credit card gives me a sense of security I do not have with my bank card.
But I am certainly not opposed to the next plan getting it down to a true $0 balance rather than just being a cyclical thing where I use and pay it.
I’m reading her credit card paragraph differently than everyone else. I read it as it will never have a zero balance because she continues to use it. i.e., on 1/1/18, it has a $500 balance, she pay it off but continues to use it so on 2/1/18, it might have a $700 balance. Between the close date and the due date, she has used it again so when she makes the payment, there are new charges on it.
She did mention she has paid some interest so I’m not sure what that is about but I do think she pays it off each month.
I read it similarly. I think some of the concern comes from a place of, in 2 months when income drops it will be really easy to rationalize using that card for lifestyle creep. She needs to make lifestyle modifications NOW, not in a couple of months after the fact. As it is the fact she is paying some interest means that she has had times where she was unable to pay it or justified to herself that she would have a small balance. Small balances can become big balances pretty quickly.
If she has paid interest though she is not paying it in full every month.
That is true. I would say in the last 9 months of starting my W2 job, I’ve had to pay interest 3 months.
I have been paying it off every month, with the exception of 3 months in the last 9. Those three months, my interest cost was $60 each month. What that means to me is that I need to pay better attention to make sure I am paying it off within the payment dates each time.
While I agree that it’s time you start being more realistic about the kids’ extracurricular expenses (which, like you say, may work itself out now that they are attending public school), I’m surprised that no one has mentioned the ex-husband’s debt that you listed in this post. It sounds like he has been able to financially contribute to the kids recently, so why are you paying off his debt? Is this part of your divorce agreement? If not, and it’s not going to affect your credit, I would probably be having a conversation with him that he needs to take that on – and I would not make any payments. I realize that it’s a fine line of what you want to bring up with him, especially if he’s giving you money for the kids, but unless it’s in writing that you need to pay off that debt, that shouldn’t be your responsibility. You could use that money toward something else once your W2 job ends.