Confession: I dreaded writing this post today. It’s just a little depressing.
See, at the end of February, Ben became unemployed. It was a decision we didn’t take lightly, and we do feel like we made the right choice.
(I won’t go into all the reasons. Suffice it to say that we had sufficient reasons for letting go of our only steady, full-time income.)
But, still, Ben’s unemployment through February has pinched our budget. And that’s caused us to take some steps backwards on our journey towards debt freedom. It’s been one of those months where we just can’t see the light at the end of the tunnel.
Still, though, things aren’t as bad as they might have been. So here’s where we stand today, and where we’re going moving forward:
This Month’s Debt Chart
As you can see, the only debt that went down this month is our car loan. And that’s only because we are still making monthly payments and have a great interest rate. Our credit card debt jumped, as we had to tap into the available credit to take care of a couple of bills. And student loans continue to creep upwards, as we’re still not making full payments.
In all, it’s a depressing picture for our family. But there is yet hope!
We’re in Our New Home
As regular DR readers know, we’ve been working to renovate a home (on which we have no mortgage) for about six months. And that’s part of the reason that Ben didn’t hit the ground running looking for work in February. Instead, he spent 40-50+ hours per week working on the house so that we could move in before March rent was due.
That work saved us $450 in rent per month, and I’m happy to say that I just paid our last set of double utilities bills. We had been paying a fortune in utilities, especially with this winter’s cold snap.
We kept the heat around 55 degrees in our reno house, since we weren’t living there. But since the water lines were hooked up, we couldn’t risk not heating it at all. And part of the house sat uninsulated for those coldest two months of winter. So for two months, our total utilities added up to significantly more than our rent or car payment.
But now, we’re not paying any more rent. Since we have no mortgage on the home, we don’t have to make any payments at all. And next month we’ll be on a much more even keel with only one set of utilities to pay.
(Plus, I just switched both our electric and our gas/water/sewer bills to a budget billing system, so that should even out our budget, as well.)
Still Working on the Car
Perhaps the most frustrating part about our unemployment issues is the car situation. As you know if you’ve read the other posts in this series, we’re working to sell our car. By downgrading our car payment, we free up a lot of money in our monthly budget, which we can then throw at other debt.
And we’ve gotten some good offers on our car, especially in the past three or four weeks.
Unfortunately, we’re still underwater on what we owe. There’s no way we can get as much out of it as we owe. And we wound up needing to use the money we’d set aside to remedy that situation. We had to use it up between finishing the house in time and taking care of a few bills we couldn’t have paid otherwise.
So we’ve had to turn down all those great offers, and we continue to sit on our giant monthly car payments.
However, there’s hope here, too.
For one thing, we’ve determined that the car – a Toyota Camry – isn’t likely to lose much more value in the next few months. And our regular monthly payments will be enough to pay it down to a salable level within four months.
Plus, we’re still waiting for Ben’s unemployment pay to get approved. (That’s a whole other story, but, bottom line: he should get approved, even though he willingly left his job.) When that happens, the back pay (now six weeks’ worth) may be enough to pay down the car so we can sell it.
And now that Ben doesn’t have to be at work every day, we’ll try sharing a car with friends for a few months before replacing our vehicle. So that will completely cut out our car payments until this summer or fall when we’re on track with paying off debt.
Dealing with Unemployment
If you’re wondering how we’re dealing with the unemployment thing, it’s pretty basic. Here’s how we’re operating now:
Cutting all extra expenses. Though we have eaten out some because of the insanity of the renovation, we’ve cut down our unnecessary expenses.
Prioritizing our spending. We’ve also started using a prioritized spending plan, a la Dave Ramsey. Before, I knew we’d be able to pay all the major bills out of Ben’s paychecks, so I didn’t worry about when everything got paid. Now, things get paid in a specific order. We wrote out our bills (after cutting the unnecessary stuff) in order of priority, and that’s now the order in which we pay them.
Our spending plan looks like this:
Groceries (set aside cash)
Fuel (enough for Ben to get to his p/t youth ministry job and for us to complete necessary errands)
Internet (essential for my business)
Student Loan Payments
Credit Card Payments
Even after we get on a more even keel, we may continue prioritizing our spending this way. It’s nice to know that by mid-month, we’ve tackled the most important items, come what may. If anything, this past month has taught us that we aren’t as secure as we may feel.
Job hunting. Now that we’re moved into our house, we’re taking a step back to look at our job situations. Ben may or may not go back into a full-time job. Our long-term goal is for him to work primarily within our community ministry, anyway.
Plus, I have marketable job skills for a higher-paying job. So right now, I’m on the hunt for a local copywriting job – or some more clients. But we’ll see where the next month or so takes our family.
Goals for March
For March, our main goal is to simply make it through. If Ben gets approved for unemployment, then we’ll work on getting rid of the car.
But this experience has also taught us the necessity of an emergency fund. That credit card debt graph wouldn’t have jumped if we’d had $1,000 or so stashed in a savings account. So that’s another priority that we have to figure out.
For now, we’re just working to find new sources of income, while living on what we have. And even though it’s stressful, we’re feeling incredibly blessed to be in our new (mortgage free!) home, surrounded by a supportive community.