We weren’t perfect with our spending freeze, but the exercise was valuable and did buffer the cold draft blowing our cash away. One nasty surprise for us, however, was when we found out that Mr. Stapler’s former employer screwed up our W2 forms. Although the employer paid to have an accounting firm prepare amended tax returns, we nonetheless had to pay more in taxes. I’m not going to mince words: That really sucked!
The rules of my self-imposed spending freeze were that we could only buy items that are (1) budgeted and (2) necessary. As a result, we had several expenses that were not budgeted but necessary and several budgeted but unnecessary (ie: the expenses could have waited). Here are the results:
Budgeted but Unnecessary Spending: $78.99
- $65 — Sweater for work.
- $10 — Gift for upcoming birthday party.
- $3.99 — 72 mini dinosaurs (for Little Stapler’s dinosaur and LEGO birthday cake).
Necessary but Unbudgeted Spending: $1,456.96
- $1,400 — Corrected tax return filing.
- $15.99 — Replacement floor fan.
- $40.97 — Case of disposable diapers (the cloth diapers don’t fit Baby yet).
Unnecessary and Unbudgeted Spending: $5
- $5 — Replacement HDMI Cable.
TOTAL Unnecessary and/or Un-budgeted Spending in January: $1,540.95.
Fortunately, some of these expenses were off-set by an overdue paycheck — Mr. Stapler’s other former employer “forgot” to pay him his last paycheck. He didn’t “remember” until Mr. Stapler asked for a copy of his last pay stub. (Just so you know, this is highly illegal in several states, if not all of them.) So, we had gone through December without my income and without a week of Mr. Stapler’s income. Pretty nice to know that we met all of our obligations despite having an unusually lean month.
Also on the plus side, Mr. Stapler picked up an awesome side gig that will pay about $15,000 for about 160 hours of work. It will be a challenge to find those 160 hours in his nights and weekends, but at $100 an hour, we will find a way to make it work!
February Net Worth Update:
Cash: – $2,996. This is the closest to $0 that I have ever seen our bank accounts, and the closest we’ve ever come to dipping into our Emergency Fund. We had the perfect storm of less income and higher expenses this past month. First, although I was back at work part-time, snowstorms and illnesses prevented me from putting in more than 15 hours all month. Second, we were hit with an unexpected $1,400 tax bill. Ughhhhh.
It’s depressing to see our cash reserves so low when we’re house-hunting. I feel like a fraud. But we have $35,000 to put down on a house — we just haven’t pulled it out of our Roth IRA’s yet.
Anywhooooo … the spending freeze continues.
Credit Cards: + $2,147. One reason for the increase is the two-week deposit we made in order to start Baby Stapler at daycare, and of course the additional cost of having Baby Stapler in daycare.
Loans: – $411. Nothing surprising here.
Investments: – $2,592.
Net Worth: – $7,324. This is so upsetting, I can’t even look at this number right now. I just have to tell myself that this was expected at the end of maternity leave, and it will get better now that I’m back at work.
- Survive: SUCCESS! We survived RSV, stomach bug, and an epic snowstorm in January. Hopefully February has smoother sailing.
- Spending Freeze: SUCCESS! I had hoped to spend zero extraneous dollars in January, but I think $141 really isn’t so shabby, and the $1,400 tax bill just had to be paid. That was not our fault.
- Set Goals for 2015: SUCCESS! What do you think of our 2015 goals?
- Survive: Any parent of two knows what I mean. It’s Baby Stapler’s third month. I just want to get a few full nights’ sleeps this month.
- Spending Freeze: As long as the flakes are still flying, I’m continuing the spending freeze. It wasn’t painful last month, so hopefully we will be even more successful this month.
- Save for a House Down Payment: The student loan payoffs are on hold right now because we are knee-deep in real estate listings, open house brochures, and neighborhood comp reports. I opened a Credit Karma account (which was astoundingly easy) and got the great news of a 799 credit score! So, we’re hoping to nail down a great rate for our mortgage. If only we knew how much house to buy …
Did you implement a spending freeze in January? How did it go? Are you continuing it in February?
Oooof, rough month with the tax stuff and the baby stuff — but it’s good that you were able to handle it all and that there’s such a lucrative side gig on the horizon. Good luck with the February spending freeze!
That’s the silver lining — at least we didn’t go into further debt just to pay the tax bill and make the daycare deposit.
You’re pulling your house down payment out of your Roth IRA? Really? I know they don’t penalize you if you’re buying your first home, but think of all the tax-free compounding you’ll be missing out on!
That’s the first thing I thought of too. If it’s principal only, then there’s no tax hit, but that’s $5,500 (roughly) per year that you can never re-invest tax free. :-/ House buying is such a complex process!
I know, I know. (I’m shaking my head in disappointment as I type this!) But life isn’t perfect, so we just have to roll with the punches. We used our extra cash to pay down student loans over the past 2 years, with the idea that we would use our Roth if we needed a down payment.
Mrs. PoP, I didn’t realize we could withdraw for a first-time home purchase. We were “just” going to take our principal. But now I see that we can take out $20,000 more for the purchase. It is waaaay too tempting, in order to avoid PMI. But in the end, the compounding interest of that $20,000 is probably more lucrative than avoiding PMI for a few years. It’s definitely worth crunching some numbers to figure out.
Congrats on surviving January. It sounds like there was a lot going on, which would have made it easy to bail on your goal, but you stuck with it which is both awesome and inspirational!
Day care for second baby hurts, a lot. Mini Maroon #2 started last week. I know it’s a necessary thing, man why does it have to be so expensive? Nice job with your spending freeze!
Ouch, right?! We are counting down the months until our oldest starts kindergarten and we won’t have to shell out for his preschool!
I’m on a spending freeze for my eBay store, so I totally get it. That tax bill sucks though.
I know you know how it feels to be on a spending freeze! Difficult, but so important!
I’m sorry you had such a tough month. Try not to let it get to you. You are doing all the right things and eventually all of your hard work will start to pay off. It’s hard to see when you are getting beat up, but it will come. I can totally relate to your sleeping deprivation situation. It makes everything so much harder. Sadly that takes time as well. I had two tough sleepers and I hope you are all sleeping through the night soon.
Thanks! Baby slept until 4:30 the other night and by the time I woke up, I didn’t know where I was because I hadn’t slept that long in so long! Here’s hoping those nights get more frequent soon 😉
Congrats on accomplishing all of your January goals. I know the big loss in net worth can be a pain, but I’m sure you’ve got a plan to make up for it! Thanks for the great read!
please, please, please sit back and really reflect on how tremendous your accomplishments, in the scheme of things, really are! You have a PLAN and MONTHLY GOALS and you reflect upon them and you still keep making them, even if you fall short of your aim!
Re: Roth IRA… listen, we all have to make the right investment for our futures that are right for the time of life we’re in. Yes, you’ll lose out on the potential growth of that money. But you’ll have a HOUSE and a HOME. (And a mortgage interest deduction, and a home office deduction, and lots of great things that actually support the investment you need in your lives NOW.
Keep on keepin’ on, Sister!
Thanks Kathy! I can’t wait for the day when I’m not renting my home and I can do the energy improvements I want, install the fixtures I want, and paint those walls!! (if I want)
Great job on your spending freeze! We’re not really on a spending freeze but I do spend a lot less in winter. I work at home and the cold weather is not appealing- I would rather just stay home and not go anywhere. That definitely saves money! =)
Yup, that’ll do it!
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