Irregular Payments

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So it looks like we’re in collapse and people are killing each other in the streets. Oh, wait, no, not really.

Sure, the markets are having a fit, which makes it painful to look at our retirement accounts. Except that we aren’t planning on touching them for many years, so eh. Feel a little bad for the baby boomers inching up on retirement, but really, not much. Yes, I know that schadenfreude isn’t exactly a positive emotion or anything, but many of them have defined their lives by excess so they shouldn’t be surprised when it comes around to bite ‘em. A little frugality isn’t perhaps a terrible thing.

Meanwhile our politicians are tripping over themselves trying to do, well, I don’t really know. Looks like they are hellbent on trying to find a way to spend my son’s future income in an effort to stave off what will be an admittedly painful correction. Personally, being a free market kind of guy, I say go ahead and let it correct. But I am probably missing the big picture.

That said, at least in our household, things are certainly not flying off track. In fact, despite the supposed tightening of the credit market, we just received notice that one of our credit cards has substantially increased it’s limit. Thanks, but we really don’t need it. We won’t mention that to the government, because they may just decide they need that as well!

We did a decent job of killing off more debt this month. Broke well past the $1000 mark. And honestly are still living quite comfortably even with that kind of progress. We could probably introduce a little more pain and get the ball rolling a little faster. But that’s a budgeting issue, not a reporting one.

I’ve been having a lot of fun recently with my side business, and it’s beginning to really take off. Right now it is not adding any to our debt attack plan, as I am stockpiling cash right now in anticipation of further expansion. The holidays are rapidly approaching, and I have a feeling I’ll be spending a fair amount on advertising soon!

Oh, and oops, I will take a cue from Wall Street and restate some debt. I misread a medical bill statement and understated that debt by around $800. Where’s my bailout?

	Aug 31′08	Sept 30′08	Change
EVERYTHING We Owe
Credit Card Debts
Chase	$17,757.23	$17,476.08	($281.15)
Other Debts
Home Mortgage	38,465.14	38,415.61	(49.53)
Low Energy Loan	14,303.58	14,178.37	(125.21)
Line of Credit	22,826.29	22,546.34	(279.95)
Medical Debt	4,815.31	4,315.31	(500.00)
TOTAL Liabilities	$98,167.55	$96,931.71	($1,235.84)

I realize I spent many years essentially running my financial life on autopilot, not really paying much attention to what was going out versus what was coming in. As long as I could cover the bills, I thought I was doing just fine.

But today, a tax return crossed my desk that just amazed me at the lack of attention being paid to their financial lives:

The couple is a dual-income two-kid family with a fairly middling combined income (for the area) of just over $35,000. (You big city folks can quit gasping now - you can live fairly well around here for substantially less than it takes just to survive where you’re at… :)) He makes the majority of the income, but she also works at a local small business for, apparently, ridiculously low wages - her W-2 reveals gross income of all of $8,900. I thought perhaps she was working for their insurance. But no, his employer provides their insurance.

Within their stack of tax documents are a mass of receipts for day care expenses. To the tune of $11,800. In other words, they are paying $2,900 for the privilege of letting her go to work. Oh, sure, they’ll get a tax credit of $1,440 on those expenses, but that’s still $1,460 in the hole for the pleasure of working a crappy minimum wage job. And that’s before taxes. Or the cost of a vehicle to take you to work. Or clothes for the job. Or a lot of costs that escape me at the moment (Caleb at Hail to Pitt has a nice writeup of the various expenses he’d encounter reentering the work force and what he’d really make returning to work instead of remaining a SAHD). Or, for that matter, the non-financial cost of having your children raised by someone else.

I often see very marginal returns on the second income earner, especially around here, with the second job yielding a dollar an hour or some similarly atrocious time-for-money trade after the various costs are taken into account. But the obviousness of how financially costly this second earner’s job is just amazed me.