Buy Nothing Day 2017

Today is Black Friday and there are so many deals out there. But the truth is I don’t need them. I am not shopping today. In fact, I am kind of coming around to the realization that while I don’t mind shopping I kind of hate spending money. I hate having to log into my budget software and see my balance drop lower and lower.

Maybe it’s holiday hangover (thank goodness not a real one) or the fact that you can’t blink your eyes today without seeing information about a “great” Black Friday deal but I’m feeling very bah humbug today. It’s officially Buy Nothing Day, ironic since I’m pretty sure most Americans unofficially celebrate Buy Everything Day today.

Since I’m buying nothing, I’m going to spend the day making something. Spending the day at home in my office working on building my new business will be less stressful, more rewarding, and ultimately add income to my life.

Sinking Fund: Envelope Method Your Savings

I Need to Start a Sinking Fund

One of my very few memories of money from when I was small was my mom explaining her Christmas Club to me. The bank auto transfers $20 from every paycheck into a savings account which they will disperse to you in October for holiday shopping. A memory that has stayed with me for years, but mostly relevant in December when I again remember that I didn’t save for Christmas all year long.

Fuck. It’s almost December again and well you can guess how much I have put away for holiday spending.

As I grow into my personal finance superpowers I am trying to keep my husband informed so we can make decisions together. My attempt at trying to explain the sinking fund went something like this:

Me: We need a slush fund.

Him: I’m not sure you need more wine.

Me: To save for important expenses. Like our medical expenses or to fix up the house.


Me: Besides, wine makes everything better. Do you think I should budget extra for wine?

Him: Probably. But how is wine connected to saving for medical expenses?

Me: because that’s what its called when you put money aside for important shit.

Him. I don’t think that’s the right word.

Me: slush?

Him: Well, now that I think of it, it does fit.

Maybe we I shouldn’t talk finances while drinking. Anyway, let’s talk about sinking funds. Prior to deciding to be a personal finance master I never heard the term sinking fund. It definitely seems like something I want to avoid (because who thinks sinking is a good thing) but essentially it is applying the envelope method to your savings. A way to handle reoccurring or large expenses that don’t happen every month.

To start I have chosen to just have one savings account at Capital One 360 because they offer a better rate than my local bank. The fact that they also don’t have a brick and mortar location will make any transfer requests take at least a day so there won’t be any immediate spending.

Balancing between saving and paying down debt is hard. Because my first inclination is to put every penny into debt. But emergencies happen. And large expenses happen. And I don’t want to be caught off guard.

Sinking Fund Categories

I want to focus on our debt snowball, and then saving money in an emergency fund before funding too many sinking funds. While saving for some known expenses is important, we need to cut spending so I’m trying to get this list down to a few essentials for now.

MEDICAL – doctors visits & medications. And between the three of us, this would need to be at least $1500. One of my medications isn’t available as a generic yet &  it’s expensive!

HOME – We are still fixing up the house so there is a lot to save for here, but getting someone to mow our annoyingly large yard next summer is top of the list. That will run us $40/wk so to have it mowed from May to October we are looking at $960.

ANNUAL PAYMENTS– We haven’t tallied this one yet. Amazon prime, a few software subscriptions. Probably less than $500

CAR EXPENSES– oil changes, new wipers, brake pads. The car is relatively new even though we bought it used. So we shouldn’t need too much for expenses. The peace of mind knowing I won’t have to worry if I can’t afford an oil change right now will be wonderful.

OTHER– This is to account for the things I will forget to budget for when expenses pop up that aren’t emergencies. A birthday gift, dinner out, trip to see the inlaws.

With the extra expenses of Christmas, we won’t be starting any sinking funds until January. But I will be pinning down the Mister to decide on how much we should put in each fund.

Side Hustle: I Need to Generate More Income

Let’s talk about income. If my family is really going to get out of debt then Increasing our income is the best way to do that. And frankly, I need a change from thinking about how I got into debt to thinking about how I’m going to get out of it.

Building the Right Side Hustle

Having a “side hustle” is all the rage right now. Every finance blog I have come across has a post somewhere talking about the importance of making extra money on the side.  I’m no different.  Increasing your income is the best way to get out of debt fast.  Not to mention that you can budget to your heart’s content but much like a starvation diet if the budget is too strict you will fail and eat all the Oreos in the package. At once. With wine because you are classy like that.

However, not all side hustles are created equal. There are two ways to bring in extra money one: one or one: many. I’m sure there are better names for this principle but I haven’t found them yet.

Both my husband and I are self-employed. We no longer trade hours for dollars and have made more money than we would have otherwise. But our business still has a problem. It has a one: one ratio.

We make jewelry & accessories. (This reasoning plays out no matter what you make, or what services you provide.) When we make a piece of jewelry we can sell it once. Each order is a separate item we can only sell to one person. Retail, wholesale, it doesn’t matter. I can not sell that item to 2 people because it is only one item. This is a one: one ratio. A lawyer, a designer, an artist all primarily function the same way. Typically you get a client, agree on an assignment, complete work and get paid.

I have had a lot of side hustles over the years and they have all been one: one. Don’t get me wrong there is nothing inherently wrong with having a one: one business. They are a quicker way to get extra money in your life, but one: many are more profitable. Income generated from a one: many project allows you to make one item and sell it to many people. I can write a book, make stock photography, or create a class. These kinds of items are typically front-loaded with effort but have a long tail for sales to build over time.

Let’s say I wanted to build a business as a tutor. Tutoring is literally called one on one help. Finding a few people to tutor is easy, though you are limited in the amount of money you can make by the hours you can devote, and the price people are willing to pay. You can transform this one: one into a one: many by taking your experience tutoring and writing a book, guide, or self-paced class helping people through the areas your students are struggling with. You’ll be able to help a lot more people and increase your income because of it – even though your product is priced at less than what you would charge to do it yourself.

Creating My Own Passive Income

I am an artist and graphic designer. My first inclination to bring in more income was to put my portfolio up and start looking for clients. I have always wanted to pursue a career as an illustrator but in that model, I’d be making another one: one business. Yes, the work would be different, more creatively engaging and less stressful on the body than making jewelry but in the end, I can only sell each illustration one time. I have come up with a few plans to take the desire to illustrate that will fit my goals better.

  1. Licencing my art.All of the products you purchase with designs on them have been created by an artist. Sometimes in-house, though often by an independent artist who has sold the right to use their art. There is a huge market for this, even a trade show at the Javits Center in NYC every year for artists to show off and court businesses interested in working with them.Starting in 2019 I will be putting together a licensing portfolio and marketing my art to be licensed. While I’d love to participate in the NYC show, it is very expensive and my business would have to generate enough income to warrant that kind of expenditure before going. That or I’ll have to start a business saving and hit $10,000 to be sure I can cover all the costs and extras that come with a trade show like this.
  2.  Create my own company to sell products with my designsI’m actually really excited about this one. Most of my experience is in selling retail so this business is easiest to imagine realistically. I am creating art that will be on my own finished products I’m going to start with some digital download designs (like coloring books) and easy to make on-demand items (like prints)  that will allow me to make some income before I invest in stocking actual products. I will also get to know who my customers are and create products that will appeal to them instead before investing money and finding out I’ve guessed wrong and wasted my money. Who knows, if this goes well I might not pursue licensing because this could be more profitable, or at the very least being able to exert complete control over the finished products with my art is so comforting.
  3. Write books and guidesI have been making money as an artist for over a decade. I definitely have enough knowledge to write a book that can help other beginning artist entrepreneurs on their journey. I’m going to do some brainstorming to refine this idea down from the very general “make money as an artist” so something more specific that will help my books solve a specific problem.
  4. Make a Web ComicThis one isn’t so much a money maker as it is a side project that has the potential to make money if I connect with an audience.
  5.  Affiliate IncomeI know some people go crazy on this and make tons of money. That’s not my style. However, I am not opposed to generating a small amount of income when I do mention products I use and love whether that be books via Amazon or referrals to YNAB.

Tell me, what is your favorite side hustle or passive income project?

The Stress of Starting To Clean Up My Finances

Starting to clean up my finances

I have spent the day digging through my personal finances and holy fuck everything’s a mess. I need to keep reminding myself that this is all fixable – which honestly, at this moment, feels like a really big lie. I have way less money than I thought. But no shortage of bills. While the rational part of my brain keeps telling me everything is going to be fine, the anxiety feels like a 5-year-old on a sugar high running around the room screaming, “we’re doomed!” at the top of her lungs.

My husband and I run our own business, we are artists and do quite well. With half of November left, and Black Friday coming it is the second most profitable half a month in the calendar so I know, that by the end of November we are going to be fine and perfectly able to go into December without worrying if we can pay the bills.

This is a bottom of the barrel moment for me. I am comforted by the thought that many people who decide to really fix their finances have, and survive this feeling. I am not alone!

So let’s look at some of the good things that have come out of today.

1. I don’t want my daughter starting her life out with the complete lack of knowledge about how to handle her personal finances that I had.

My stunningly large lack of knowledge led to some super poor choices, one of which was bankruptcy because that was the primary way my family dealt with debt. My mother and stepfather have both declared bankruptcy at least twice, but I’m inclined to say three times.  I am kind of ashamed at how poorly I’ve taught my daughter to handle money just through how I’ve talked about it and how I have openly avoided it. But it changes now.

2. I have owned my debt.

I am aware of all of its existence and while this is depressing I am no longer afraid of being responsible and dealing with my money. I would avoid bills. Lay them around the house willy nilly and forget them I would get to adulting eventually.

3. I know where our financial problems have come from.

While yes, I have some credit card debt the real problem has been my refusal to be an adult and say no I don’t need to purchase that now. I usually pay cash. This is encouraging. I’m still working on a plan and family budget for how to deal with this, but it feels doable because I am the primary person I have to control.

4. You can’t change what you don’t track.

This is true for all areas of life. Now that I’m aware of my debt I am building systems to track my money so I can get to the future I want. I’ve come up with a plan on what to do with bills, and how I am going to pay them so I know 100% for certain that I afford them. And I have been really bad at saying no to myself when it came to purchases. Knowing I have a negative net worth forces me to ask, “Do you need to purchase that?” followed by, “Do you need to purchase that today?” and ”Is this the best price?”

5.  I am finally going to start a side hustle. Or three. 

Let’s be honest. There is only so much financial belt-tightening that anyone can tolerate. If I am really going to make a dent in this debt it is time to start working on some of the extra projects I’ve had in my head.

As a freelancer, I have been aware of passive and diversified income for a while. I just never did anything about it. I was too busy, or too stressed out to devote actual time to work on extra income generating projects. Now I feel both energized to work on these ideas, but also the financial pressure of contributing more to my families recovery and success because my irresponsibility helped get us here.

In the end, I am hoping that the stress of being on top of my finances is less stressful than being unaware and afraid of every purchase and bill that comes my way.

Today’s action item: work on a flexible food budget & meal plan system that will rein in spending at the grocery store.


Debt Reveal Day: First Monthly Review of My Finances

Its Debt reveal day. I have been collecting and listing my debts, and honestly, it isn’t as bad as I thought it would be. But before we get to the numbers, I read an article in the Wall Street Journal about the lack of financial literacy in America called “How Financially Literate Are You Really?” By Meir Statman and until now I never really thought about my lack of ability with money as a poor financial literacy.

There’s a financial-literacy crisis in the U.S. And it is probably even worse than it seems.

Study after study shows how poorly Americans understand money and investing. Consider this common question posed by surveys: “Suppose you had $100 in a savings account and the interest rate was 2% a year. After five years, how much do you think you would have in the account if you left the money to grow: more than $102, exactly $102, less than $102?”

This is one of three questions typically used to measure financial literacy. Incredibly, only one-third of Americans older than 50 answer all three questions correctly.

As I started the article, I worried I would find myself described inside, thankfully I passed the test. But just because I show a small amount of financial literacy doesn’t mean it crosses over into demonstrating real comprehension through action.

Is getting out of debt like losing weight? Something you learn about and think about more than once before you apply the principals to your life? I hope so because I have thought of getting out of debt before. I have learned a bit about finances from books, but also through trial and error.  Maybe that makes my current debt worse because I knew I was acting stupidly. I wasn’t  thinking at all. I was just living by whatever I wanted. Without regard to finances.

I am about to go through my accounts and provide you with a rundown of my debts and a light overview of my plan to eliminate them. But after reading that article this morning, it occurs to me that getting out of debt is only part of the answer. If I don’t go forward and purposely increase my financial literacy, comprehension, on and action, then I am doomed to get back here.

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Thoughts On All This Debt

I am missing a few interest rates, which I will dig out and update. But for now, it is quite shocking to see that without my mortgage I am worth a negative $101,098.75.

Yes, I am aware that the mortgage is a debt, but since the house also has a value and since the mortgage will be the last thing we pay off I am not worried about it. If you want the details, it is a 15-year mortgage meaning we are already paying it off faster than the average person with a 30 year. The car has value too, but we won’t be selling it. More likely than not it will go to my daughter when she gets her license.

I am comforted that most of our debts are not stupid spending choices, but educational debt. That doesn’t make it less daunting to pay off. But I feel like I am a lot less financially stupid.

The Plan

Pay off all credit cards first, in the snowball method- husband’s card first, then my card 1 because it has a higher interest rate than my credit card 2 which was a promotional rate for 2 years same as cash. The two credit cards that are gaining interest (his credit card 1, + my credit card 1) total $5,114.65 which is a lot. But I’m sure I can pay that off next year. Hopefully early in the year.

After the credit cards are paid off we are going to go after the student loans. And I’m going to have to do some math and figure out what is best. Should I prioritize balance or interest rate? I didn’t realize until putting this post together that some of our student loans were getting such high-interest rates. 6.8 – 7.5 is pretty high for a student loan, even 5% is high.

These loans are grouped into 3 consolidated payments, which is then split up and applied to the individual loans. I can pay on each loan separately, and I can pay extra above the minimum payment. But as I looked into the details of these loans I can tell you that some of the lower balance loans get only $7 applied to them and that is split between interest and principal. At that rate, they will take forever to pay off. I am inclined to pay off the lowest balance ones first and then go after the larger loans. I feel a little bit like it doesn’t matter, as long as you are paying something off.

To start dealing with the student loans I am going to call and see if there is anything I can do to lower the interest rates – especially on those with the higher balance. I hate adulting and talking to the loan companies but debt won’t just magically disappear without work on my part right?

I’m going to be honest, collecting this list was kind of stressful, and I need a little room to breathe. So I’m going to take a few days to look at our household budget to find places we can trim excess spending and look at our sources of income to see how we can bring in more money.


Until next time,

A Beginning Manifesto

I am in debt. I’m actually not quite sure how much yet (we will talk about the details in the next post) but guaranteed it is at least $100K including both my husband and my student loans. Double that if you include the mortgage.And up until recently, I didn’t care. I pay my student loans every month, along with all my other bills. I spend a bit too much but we get by and I was ok with that.

Until I decided that I want to move to Canada. I’ve always wanted to live there, but now that my daughter is graduating high school I have the freedom to relocate without interrupting her education. So I researched the requirements to get a permanent resident visa for Canada. The important part – have a net worth of $100k CAD which is about $70k US.

I am not one to give up on my dreams. I will move to Canada. It is just going to take a little elbow grease first.

The Plan

I will be writing here about all of my adventures, struggles, and successes as I make my way to debt free.  I will give you regular updates as I make my way through this journey but each month I will do a review to give you specifics and track my goals.

The idea of these monthly updates will be to give an overview of:

  1. What has happened in the previous month?
  2. How am I tracking on my debt free goal?
  3. What am I going to focus on for the coming month?

Of course, that isn’t all. I have so much to learn: budgeting, saving, investing, and a few other things I’m sure. I need to figure out ways to increase my passive income. I’m currently a freelancer, but freelancing is what I call a 1 to 1 business. You get a client, complete the job once and bill that job once. Yes, you can work for a client frequently, but each assignment is a new piece you can only sell once. Passive income allows you to make an item once and sell it many times without any additional work. I love freelancing and not being beholden to a 9-5 job, but there are smarter ways to work than what I’m doing now.

At some point in the future, I want to learn about rental properties, but I am going to focus on debt reduction before I get into large-scale investing like buying an investment home.

I’m going to spend the next few days figuring out my finances, my debts, my assets and I will give you the first update.