My SHINY Nickels

Live Smart. Save Money. Retire Early.

DIY Project: Fireplace Makeover

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Last November, on a sleepy Sunday afternoon, I was watching a movie with my husband in our family room.  Ok, if you really want to know, it was “The Terminator”.  I had never seen it.  Yeah yeah yeah, I know.  Anyway, during one particularly long action scene (I tend to get a little fidgety when they get lengthy), my focus began to shift from the television screen itself to the wall behind it.

I scanned downward to our sweet little brick fireplace with the oak mantle, and then over to the left where our audio-video equipment sat in the open, on a glass shelving system with an atrocious amount of wiring coming and going in every direction.  Along that same wall were various impractical pieces of furniture that didn’t really tie together; they were just leftovers from when we downsized.

What did I see?     Potential.

This is what the wall looked like that day.

1_BEFORE

 

Now, no disrespect to the “Ah-nold”, but he had officially lost the battle for my attention.  I already had my laptop up and running at this point, while the movie merely served as a violent soundtrack to my urgent internet hunt for DIY fireplace remodel projects.   Just a quick overhaul of the brick and maybe a larger mantel or something? Nothing too crazy.  I googled and bing’ed my way around, finding inspiration and ideas.

This is where Mr. Nickels says I got a scary look in my eye.

I’d done my research, so I gave him a rough idea of what I wanted.  “Dual custom built-in bookcases on each side, makeover the mantel, apply stone veneer to the fireplace, a couple of light fixtures, and…”

“I thought you said we were only making over the fireplace.”

“That was before I went online, silly.”

So our makeover began.  That very same day.  (If you didn’t already know, patience is not one of my personality traits.)

We cleared away all of the furniture, removed all of the audio-video equipment, and Mr. Nickels started in on the wiring.  We knew we didn’t want a bunch of funky wires running to and fro like we did before, so he removed the drywall and ran all of the HDMI and electrical inside the wall instead, with ports at each end.  There were a few moments of frustration along with an occasional curse, but he got ‘er done.

2_RANDY_WIRING

3_LEFTCAB_BASE

Next we built the bases of the cabinets and secured them to the floor and wall.  I was already excited, even at this stage.

4_BOTHCABS_IN

We purchased stock cabinets from Home Depot and secured them to the bases, the wall, and each other.  The mantel was removed, and I started applying the stone veneer to the fireplace, starting at the bottom and working my way up.  (While it may look like I’m admiring my toenail polish in this picture, I’m actually in the middle of applying the stone veneer.  I swear.)

6_LEFTCOUNTER_CABS_PRIMED

The stone veneer on the fireplace was finished, and I put two coats of white primer on the cabinet bases and doors.  We painted the mantel, and trimmed it on both ends, to accommodate the bookcases that would eventually be installed.  On the left cabinet you can see the dark wood we used for the top.  We found an unfinished butcher block countertop at Ikea, trimmed it to size, and then stained and sealed it.

7_CLOSEUP_LEFT_COUNTER

Here’s a close-up.  It turned out gorgeous.

9_BOTH_BOOKCASES

We built both bookcases, painted them with two coats of primer, and attached them.  It was finally starting to take shape.

10_NEARLY_DONE

By this point, we were getting close. We applied stone veneer to the wall behind the television, attached the wood trim to the front of the bookcases to frame them out, added lighting fixtures, put up the crown moulding, and added two more coats of paint to the entire thing.

11_AFTER_COMPLETE

And…it’s DONE!  We added baseboard to the bases of the cabinets to match the other walls, installed slate tile on the fireplace hearth, caulked and sealed all the crevices, added cabinet handles and filled it with stuff.  All of our audio-video equipment, laptops, printer, etc are now nicely hidden away in the left-side cabinet, while our movie collection hides in the right-side cabinet.

I don’t know how much this would have cost us to hire a professional; it’s in the several-thousand-dollar range, I’m sure.  But for us? It was about $800 in materials. And, good materials at that. Solid wood, slate tile, stone…you get the point.    I’m sure if I could add up all of the maintenance/improvement/repair costs we’ve avoided over the years, by doing things ourselves, it would be in the TENS of THOUSANDS.  Seriously.  Now, I already know what some of you muttered under your breath…

“Lady…you’re smokin’ a fat one. I don’t have a lick of experience with [carpentry/tiling/plumbing/auto repair].”

That may be true.  But it doesn’t have to stay that way.  You’d be AMAZED what you can learn to do with your own two hands.  Just a few months back,  a strange error came up on my car’s diagnostic panel.  We weren’t sure what to make of it, but instead of just taking it in to the mechanic, we googled the error code, found some YouTube videos and DIY walkthroughs for the problem, made a trip to the auto parts store and had it fixed in one afternoon.  $75 and a few greasy hands later, it was repaired.  It would have cost us that much or more just to have the mechanic glance in our car’s direction.  

Jack-of-All-Trades, Master of Diddly-Squat

Remember this…you don’t have to know everything about everything.  We’re just a couple of jacks-of-all-trades, but masters of absolutely nothing.  We tinker around in plumbing, electrical, carpentry and auto repair just enough to get the job done, but not enough that I could quit my job and become a full-time plumber. (That, and my aversion to poo.)

In the end, Mr. Nickels and I had fun building this together, while adding real value to our home.  And…we appreciate it so much more, having built it ourselves.  It goes without saying, but this is one of the many reasons we’re able to meet our savings goals every year.  We’re not handing over $1,000 to the mechanic every time we hear a rattle, or $500 to a plumber for every clogged drain.

BEFORE

1_BEFORE

AFTER

11_AFTER_COMPLETE

Are you a DIY’er?  Or wish you were?  Have any success stories?  Or epic failures?

 

 

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Now for one last thing , just so I can sleep a little better tonight…

Disclaimer / Legal Mumbo-Jumbo:

DIY projects, such as those mentioned above, are performed at your own risk.

As with any do-it-yourself/DIY project, unfamiliarity with the tools and process can be dangerous. All DIY-related posts should be construed as theoretical advice and aesthetic inspiration. Improper use of tools could result in damage to your property or serious bodily injuries. MYSHINYNICKELS.com is not liable for any damage or injury resulting from the DIY projects listed or referenced.

Life Stories: A Second Wake-Up Call…the Tragedy that Changed Our Lives

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If you know me well, or have at least read my “ABOUT ME” page, you know that our goal is to retire early.  Not to come squealing into the 65-years-of-age retirement finish line at the last second, but to beat that mark by a wide margin.   I’m often asked by people, “Why?”…to which I reply…”Why not?”   There is nothing that says I have to wait until Social Security kicks in to enjoy a life of financial independence.  I want to sleep in ’til noon if I like, take a bike ride with my husband in the middle of the afternoon or even travel for months at a time to far-away places.

But it takes dedication and commitment.  We all know that anything you truly want, way deep down, is worth some sacrifice.  We currently put away just over 60% of our net income into investments.  Between our extreme savings rate, and the true magic of compound interest, the balance will grow quickly.  Our target is $1.25 million dollars, and according to several calculators, we’ll get there in less than 8 years.

Now that I’ve answered the “Why do you want to retire early?”, I’ll answer those that ask, “What gave you that crazy idea in the first place?”

It was the second wake-up call.

Near the end of 2012, the day after Christmas in fact, my husband started a new job.  A few months later, he came home to tell me he’d found out something rather morbid that day.  He was told that Sam*, the guy formerly in his position, had died…at work.  Sam was in his early 60’s and was only months away from retirement.  7 months, to be exact.  Other employees recalled him coming into work each morning with a cheery announcement of how many working days he had left…he could see the day coming  where he would finally walk out the door to start the next chapter of his life.  He didn’t know that day would never come.

Naturally, I asked my husband what happened.

It’s November 20th, two days before Thanksgiving.  Sam stands up from his desk, grabs his coffee cup and begins walking down the main hallway.  Without warning…he collapses.  Coworkers rush to him, and immediately begin CPR.  He was having a heart attack.  While the efforts to resuscitate continue, the paramedics arrive.  But it was too late.  He died right there on the floor. 

Days after hearing that story, I couldn’t get it out of my mind. I started asking myself things like…”Am I going to work and save for 40 years just to end up dying before I can enjoy it?”…”Am I doing all I can to reach my financial goals?”…”Can I reach them any faster?”

What was once a plan to put in 40 years with a respectable savings effort,  has become a determination to save/invest our way to retirement in less than 8 years from now.  You only have one life to live.  Are you going to (a) make changes to live life on your terms as soon as possible, (b) come squealing into the retirement finish line at 65…or (c) never have enough to retire at all?

——————————

A few days into his new job, my husband is sitting at his desk, in Sam’s old office.  He rolls over to the computer,  and opens a spreadsheet that is sitting on the desktop.

He calls out to his manager, “What are these numbers on the right-hand side?”

“That’s Sam’s countdown. To retirement.”

 

 

* Name has been changed to respect privacy

How to Avoid “Lifestyle Creep” (and Start Saving!)

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Let’s paint a mental picture together…you’re at work, and you get a phone call.  It’s your boss…telling you…you’re GETTING A RAISE!

You calmly set the phone down…acting very cool and collected as you let the good news sink in for a moment…then suddenly…you valiantly rise up from your tiny cubicle in your ill-fitting khakis and begin performing acrobatic leaps through the office, whistling “Eye of the Tiger”, while fleeting images of all the amazing things you can buy begin filling the lobes of your brain…and……….“POW!”  

Hi…it’s me again, giving you a solid punch in the nose, in an effort to interrupt this ridiculous daydream you’re having.  So snap out of it.  (Yeah, I realize I kinda led you right into that one. Sorry, I can be cruel at times.)

Here’s an ice pack, now let’s move on.

We get a raise, and what’s the first thing we all do?  Start figuring out how much more our paycheck will be and visualizing what we’ll do with it; how we can “live a little higher on the hog” with this increase in extra cash.  Now, I’m not a complete killjoy; no doubt getting a raise is something to celebrate (heck, pop open some cheap champagne if you like), but let’s be smart about it…what you do with it, is where you can separate yourself from everybody else.

When you think about it…pay raises are sneaky little buggers…they result in a slow and steady rise in income, which nearly always leads to what has been called…(insert drum-roll here)…“lifestyle creep”.   For your convenience, I’ve provided a lovely definition here:

Definition: “Lifestyle Creep”

“A situation where people’s lifestyle or standard of living improves as their income rises.  As “lifestyle creep” occurs, and more money is spent on lifestyle, former luxuries are now considered necessities.”

— courtesy of Investopedia.com

In other words, when you make more money, you spend more money.  If you’re anything like I was, no matter how much I made over the years, I managed to spend it…all.   I never had “extra” money; I was yet another victim of “lifestyle creep.”  My pay would go up, and the spending would follow soon after, without even trying.   The thing about small incremental pay raises is that, individually, they’re not enough to be life-changing.  But my point is that while it may not seem like enough to bother saving it, it’s also not enough that you should really miss it, either.

The days of just letting your money and your finances happen TO you, are OVER.  You need to be in the driver seat, in control of your finances, fully conscious and acting with intention.

So where do we go from here?  It’s time to be strategic about our pay raises.  These are bright, shiny opportunities for us to make a difference in our financial situation, for the better.  Trust me, you won’t even miss these little increases to your paycheck.  JUST. TRUST. ME.  To do this, we’ll let the good ‘ol Direct Deposit* system work to our advantage.

* I realize not everyone has direct deposit at their disposal, but this was written with the assumption that you do.  If you don’t have direct deposit available at your employer, you’ll just need to be all the more diligent about tucking your money away with the same method I describe, but manually.  

Let’s get started…

1.   Determine what your monthly net (take-home) pay is.  For this example, let’s use $4,000.

2.   Determine what your monthly expenses are.  Add up your bills, groceries, gas and a modest (but satisfying) amount of spending money, and set that number aside.  For this example, I’m going to use $3,000 as the monthly expenses.

3.   Next, divide your monthly expenses amount by the number of paychecks you receive in a month.  I get paid twice a month, so I will divide $3,000 monthly expenses by 2, to get…$1,500 of expenses per paycheck.

4.   Now I have the FIXED AMOUNT that I will have sent to my CHECKING ACCOUNT……$1,500.   Perform the calculation yourself, and enter that amount on your direct deposit form with your checking account information.

5.   Next, direct the REMAINDER of your paycheck into your SAVINGS ACCOUNT.   Once you’ve entered your savings account information, there should be a checkbox that says “Remainder”, or something similar, where you indicate that you want the rest of your paycheck sent to your savings account.  Now turn in the form to your HR department. 

6.   One last step.  Please now engage in the acrobatic leaps I described in our daydream earlier (ill-fitting khakis are optional), because you just made a huge step forward in managing your finances.  You have made a conscious decision to make your spending and expenses a fixed amount, and allow your savings account to grow right along with your future raises.  Here’s a virtual high-five in the air, because you have managed to do what a majority of working people don’t.  (And yet they wonder…year after year, raise after raise, why they still feel broke).

You will be amazed how quickly the balance in your savings account grows.  Then, year after year, with every pay raise, you’ll smile with glee as you see that beautiful little pile of extra cash deposited into your savings account without you lifting a finger.  The fact is, humans are emotional creatures; the more we put our finances on auto-pilot, the less damage we can do.

So I’ll leave you with this…get up out of your cubicle (I know you’re reading this at work…you naughty little thing) and contact your HR department.  Start the process…avoid “lifestyle creep” by fixing your expenses and allowing your pay increases to be escorted straight to your savings account.  This LITTLE change will reap you HUGE rewards.

Living on Less: How to Maximize your Pleasure-Per-Dollar!

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When I was a kid, I loved cardboard.   Shoe boxes… shipping boxes…and oh nelly…that rare occasion when a large refrigerator box would come my way. You better believe the clouds would part and the Hallelujah chorus would start playing.  They made for ENDLESS building opportunities; I would spend hours and hours crafting castles and dollhouses and…ATM machines.  (I was an odd kid; I guess my interest in money began early.)

The fact is, kids love to play with everyday junk.  We’ve all seen it…a child sitting among the post-Christmas carnage of wrapping paper and toys…playing with…a button.   Never mind the $100’s (or sometimes $1,000’s…ack!) worth of toys surrounding them, they are enamored with the simplest of things…and, above all else, HAPPY.  HAPPY. AS. A .CLAM.

Which leads me to ask, why are we satisfied with getting only minimal pleasure from expensive things/experiences? While some financial bloggers out there would crucify us for splurging on Starbucks, or dining on a high-priced, high-quality meal at a renowned restaurant, that’s actually not where I’m going with this.  I see things a little differently.  I like to think about it in terms of “Pleasure-per-Dollar”.

Example:  One of my favorite things to do is enjoy a “coffee shop date” with my husband.  Hot beverages.  Conversation.  Some quiet, cozy book reading in plush leather chairs way in the back.  To me, this is divine.  And it costs a whopping $6 for the two of us. (Mocha Frap for him, house coffee for me. You know you were wondering.)   Now I can already hear the cries from the crowd of extreme frugalists ringing loudly…”NOOOOO!!!! You paid WHAT for a cup of coffee?  You could have made your own at home for a nickel!!!  YOU WASTEFUL GLUTTON!!!”

But making my own cup of coffee at home would be missing the point completely.  It’s not about the coffee; it’s about the experience.  The pleasure factor for me on these coffee shop dates is high. So…let’s go ahead and have some fun with it, and assign it a somewhat-arbitrary “pleasure score” of 80 out of 100.   With zero being minimally pleasurable things like watching paint dry, and 100 being something off the charts like eating a fresh wood-fired thin-crust Neapolitan pizza at the top of Mount Everest.  (Maybe it’s just me, but that sounds out-of-this-world amazing.)

So let’s have some fun with this, shall we?  We’ll take the pleasure factor of the coffee shop date of “80”, divided by $6, which gives me a “Pleasure-Per-Dollar” ratio of 13 pleasure points per dollar spent.  Did I lose you already?  Stay with me here.

Now for comparison, let’s look at a recent trip to Outback Steakhouse that Randy and I had last week.  The total bill with tip came to $54.40, for two entrees and two iced teas (we really live it up when we go out).   This is a fairly typical cost, maybe even on the lower end, for 2 people at a chain steakhouse.

The food was decent, the ambience was typical (crying babies, clinking of utensils and shouts of “CORNER!” emanating from the kitchen staff), and in less than an hour, we were out of there and moving on with life.  I’ll give that dinner a pleasure score of 40.  Now let’s do my favorite part…the math!  Pleasure factor of 40, divided by $54.40 spent, gives us a ratio of 0.7 pleasure points per dollar spent….that’s less than 1!  Ack!

Outback Steakhouse = 0.7 Pleasure Points per Dollar

Coffee Shop Date = 13 Pleasure Points per Dollar     —- WINNER WINNER, CHICKEN DINNER!

By now you’re thinking, “Yeah, yeah, yeah…enough math, get to the point already, lady.”   It’s this…I’m getting FAR MORE pleasure-per-dollar-spent from the $6 coffee date than I am from the dinner at Outback.   We’re spending large amounts of money on things/experiences with low pleasure factors.   Don’t get me wrong…it’s not about denying yourself of every luxury in the name of frugality either.  It’s about getting smart.  Smart with our money and what we do with it.  If you find true happiness in painting, then gosh-darn-it, buy only the painting supplies you need, but buy the best quality supplies you can find.  Then trim back on the things that don’t make your soul smile. It’s give-and-take, spend a little more here, a little less there.

The key is to find what really makes you HAPPY, what gives you the most PLEASURE, and spend more loosely in those areas. Randy and I occasionally enjoy a luxurious dinner at a place called Hawks (it’s the same place we had our celebratory debt-free dinner, by the way).  For us, it’s a place that is worth every dollar, but we only go every once in a while.  We spend money on the things that COUNT.   New cars?  Nope.  Big fancy house?  Not.  Designer stuff? Ha!  We spend money on the things we LOVE.  Travel…coffee dates…and good food.  These things make our soul smile, and when you maximize your own Pleasure-Per-Dollar, your soul will smile too.

Throwback Thursday: (One of) The Most Embarrassing Stories of My Life

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(NOTE: If you’re looking for my personal finance blog, don’t be alarmed. You’re at the right place.  But occasionally I think it’s important to set the debt and finance stuff aside so that you may have a bit of fun at my expense…by enjoying an embarrassing-but-true story from my childhood.  You’re welcome.)

Yes, that’s me. Circa 1984. Mentally do some age-progression by adding some sky-high curled bangs and lip gloss to visualize me in 6th Grade.

6th grade is a time of growth; you’re at the top of the elementary school food chain, but you’re still a little green, still a little naïve. You’re beginning to feel a bit “grown up”, and well, mature.  Looking back on my own 6th grade year, I was a gifted student, and quite book smart.  Spelling was, by far, my strongest subject.

But even with book smarts, I sometimes lacked common sense.  (Like the time I accidentally popped the button off my jeans while getting ready for school, and decided to secure it with a diary lock that was sitting conveniently on my dresser.  Too bad I left for school with the key still in my nightstand. Let’s just say my mother was not pleased when she had to drive down to my school to bring me the key so I could use the restroom. Apologies for the sidebar, let’s continue.)

Every spring, my elementary school held a school-wide spelling bee.  The winners from each class would compete on stage in the school cafeteria.  As usual, I was ready without a lick of studying.  I out-spelled everyone in my class, and then moved up to the school-wide spelling bee. I breezed through that competition as well, winning with the word “SUITE”.  It was official…I was the Bancroft Elementary Spelling Bee Champion. In just a few short weeks, it would be time to compete at the city-wide Sacramento Spelling Bee, to compete against the other top students in the city.

The day came. I was glowing that crisp spring morning…my principal came to the house, picked up my mom and I in his late-model Lincoln Continental, and drove us to the auditorium.  I had thought carefully about my outfit that morning…New Kids on the Block sweatshirt, cowgirl denim skirt and Keds with socks. Even then, I was a fashion icon.

I walked inside the auditorium and immediately my body filled with dread…there were hundreds of people in the crowd, and a whole lot of really smart looking kids walking around.  But I forged on,  determined to avoid last place, at the least.

The competition began, with 50 students from all over the city in 5 rows of 10, sitting onstage.

Round after round, I correctly spelled each word. Slowly I began to realize that the group of 50 had dwindled down to around 25.  A very sweet elderly woman started passing a tray down the rows; it held a pitcher of water and some cute little Dixie paper cups.  Out of nervousness and a tendency to fidget, I grabbed a cupful every time it passed.

Time went on.  I continued my winning streak.  Then I felt it…that tiny, tingly little urge that I would have to excuse myself soon…the restroom was calling.  For a while, I ignored it.  And ignored it some more.  That is, until an achy, slightly-uncomfortable feeling started coming over me…I really had to go, and I mean REALLY. HAD. TO. GO.  But something was keeping me from leaving the stage…fear.  Fear that if I left the stage to relieve my oh-so-achy bladder, that they wouldn’t let me back to the stage and I would forfeit my chance of winning.  So, in my 6th-grade ignorance, I kept myself glued to the off-white metal folding chair onstage.

By this time, the number of competitors was further dwindling and I found myself sitting among just a handful of kids.  The water continued to pass along the rows.  Then it came…the feelings of sudden and immense dread when you realize you’ve waited…too…long.

It flowed…what began as a trickle quickly developed into a steady yellow stream, pooling onto my chair, reaching the edge, and finally breaking the surface tension enough to cause spillage onto the floor.  I was now sitting in a pool of urine, yet stone-faced as to not give away that something majorly inconvenient had occurred.  It wasn’t long before I could hear whispers, laughter and gasps of horror from the few remaining kids around me.  Then they called my name…it was my turn.

I rose valiantly from my chair and walked to the podium, creating a trail of drips the entire way.  I had played with the idea of misspelling on purpose just to get me off the stage, but no, I wasn’t goin’ down like that.  With every word I spelled correctly, more and more attention became focused on me and the saturated skirt I was wearing.

Then, after what seemed like a small eternity, it was finally down to just two; myself and a boy named Miles Davis. I had already come this far, and I wasn’t backing down now.  As we both moved to the front of the stage, he stood a good 10 feet away from me.  I’m sure he was desperately trying to distance himself from either the embarrassment or the stench of pee, or both.

In the final round, Miles incorrectly spelled his word (what it was is escaping me at the moment), which opened the door for me. I took a long deep breath, and spelled the winning word, P-R-O-S-P-I-C-I-E-N-C-E.  I could hardly believe it.  I was the 1990 Sacramento City Spelling Bee Champion…wearing a urine-soaked denim cowgirl skirt and damp Keds that now squeaked when I walked.  Camera flashes began going off; I posed for picture after picture. I had never imagined my first paparazzi experience would be so humiliating.

A few weeks later, the pictures showed up in our school newsletter, the Bancroft Banner.  There I was, holding my trophy…clearly displaying a look of forced enthusiasm on my face.  At the moment those photos were taken, there were no inner thoughts of grandeur or exhilaration running through my mind. Not even close.  My only thought was “I wonder if anyone has a spare change of clothes…”

Don’t Be Afraid to Make a BIG Change

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“Downsizing”…it’s been a buzzword for the last few years.  Companies are downsizing, folks are downsizing their homes, heck even my Nature Valley granola bars are smaller than they used to be. (Did they think we wouldn’t notice? Sorry, off-topic.)

Fortunately, I haven’t been on the receiving end of a company downsizing, but we did choose to downsize our home.  This was part of our “let’s get all ninja-like” on that $40k of debt we had. Plus, we knew we had to get our living expenses down ASAP if we were going to stop living paycheck-to-paycheck.   Naturally, we looked to our  biggest expense…housing.

Our mortgage was about $400k, give or take.  The PITI payment (Principal + Interest + Taxes + Insurance) was just shy of $3,000.   Aye, aye, aye.  So we did something drastic.  We sold our house and MOVED.  Now, let me tell you that I get it…I really do…people are attached to their houses…”Waaaaaah!!! I brought my babies home here…I installed the tile in the bathroom myself…the concrete driveway has our handprints embedded with our cutie-patootie names scribbled next to them! Waaaaah!!!”

I didn’t say it was easy.  NOT AT ALL.  But the house no longer fit our financial goals, plain and simple.  Was it nice living a cushy life in the suburbs, sitting in a 2,600 square foot house with an elegant two-story entry and custom backyard?  Um, yeah.   But was it too much space for too much money?  Absolutely.   It wasn’t hard to come up with the “cons” of downsizing; it’s a pain in the @ss to move, we liked our nice roomy house, we wouldn’t have 3 bathrooms anymore, where would everyone gather for Christmas, blah, blah, blah.  We had to think a little harder to get our list of “pros”, but we did…

  • Less square footage to clean / maintain / furnish
  • Smaller home encourages more family interaction
  • Lower heating / cooling costs
  • Lower insurance costs
  • Lower property taxes
  • LOWER MORTGAGE PAYMENT!

So we did it.  And we don’t regret it for a single second.  We sold our primary home and moved in to the 980 square foot rental we owned, that also happened to be my husband’s childhood home.  The home was passed down to him, so the only debt associated with it was a small $75,000 remodel loan he used to spruce it up and modernize it.  As a bonus, the tax basis of the house also passed down to my husband from when his parents owned it, so our TOTAL ANNUAL property taxes were now only $500.  Yes, only 2 zeroes there.

Here’s the breakdown:

Big House Small House
Utilities 420 190
Insurance 100 35
Property Taxes 410 42
Mortgage Pmt (P+I) 2,390 500
Monthly TOTAL $3,320 $767
ANNUALIZED $39,840 $9,204

Just looking at the monthly difference, our cash flow increased over $2,500 from that one change alone.  That’s OVER $30,000 ANNUALLY.   Remember, this is just MY experience.  Yes, we had another home at our disposal with a very low loan and ridiculously low property taxes.  My case may be an extreme example, but even if someone downsized and had half the results we did, that is a SCORE.  And I haven’t even mentioned home equity.  In northern California, where we live, there was no equity to be had when we sold.  But for some of you, it may be smarter to sell your house, move into a rental, and throw that equity at your debt/savings.

So this is the point where you start looking at priorities.  What’s important to you?  Continuing to pay that too-expensive rental/mortgage payment…or get out from under the high cost, the high stress and get control of a major expense? For some of you, it may not make sense to go through the hassle of moving just to save $200 a month.  But I’m fairly sure that for many of us, we’re spending too much of our income just to keep a roof over our head.  I dare you…run the numbers yourself…what do you see?

The Journey Begins…

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Interestingly, the business trip that started our whole debt-elimination journey ended up cancelled. Figures. But the fire that had been lit by that circumstance was far too hot to fizzle out at this point. I was determined and I was focused; we would start a savings account and then throw everything we had at our debt. I went into a Google-frenzy; searching and finding all sorts of personal finance articles/gurus/blogs.

My my my, the things I found. It seemed that for every true financial mentor that was out there, there were 10 more that were purely charlatans, masquerading as a financial know-it-all in the interest of making a buck. In these early days, I was drawn to Dave Ramsey. (Now before you start ‘flaming’ me with anti-Ramsey comments, go back to the beginning of that sentence, emphasis on ‘early days’). He had a simple approach, what he calls “Baby Steps”.

He begins with building a small emergency fund, and moving on to knock out debts one-by-one with the “Snowball Method”. For those who don’t know what the “Snowball Method” is, google it and come back. There’s plenty of people on the web who describe it much more eloquently than I could hope to. Moving on…

And frankly, this worked for us. We didn’t follow his plan to the letter, but he provided the basic framework as well as some motivational stuff to chew on. We saved up our $1,ooo emergency fund rather quickly. Then aimed our efforts towards our debt pile. It may not be as high as some, and it may look gargantuan to others, but we had about $40,000 in debt across a few credit cards, a couple personal loans, and an auto loan. This does not include our mortgage, which was about $400k at the time. (Even now, that number still makes me cringe.)

I’m an impatient person by nature, and this whole debt nonsense…well, I wanted to get ‘er done. Like yesterday. But where to begin? Well, there’s a few ways you can start the debt elimination process. Some start with the debt that carries the highest interest rate, others start with outstanding debts to friends/family, and some start with the smallest balance in order to get a quick, psychologically-satisfying win right off the bat. Unless you’ve already forgotten the very first sentence in this paragraph, you should be able to guess that we went with…the last option. I needed some quick results to keep my momentum up. Normally I’m much more strategic in how I approach problems, but in this case, my impatience won out. But oh how glorious those first few “wins” were. We started with the easiest one…a Capital One credit card with a balance of $1,500.

From that point, we moved from debt to debt, until we reached our last one, an auto loan for $15,000. However, let me step into the confessional booth and pull the curtain behind me for a moment. (Wait, is there a curtain? Or am I thinking of a photo booth?) Anyway…we weren’t perfect. We had moments of “we’re doing fantastic, I deserve a (fill in ridiculous materialistic item here).” But what counts is what you do MOST of the time, not what you do SOME of the time. So while we may have delayed our debt-free status by a month or so by squirrelin’ around, we got there eventually.

On April 19th 2013, we celebrated. We were officially debt-free (except for the mortgage, but that’s a whole other post…soon to come). Mr. Nickels took me out to my favorite high-end restaurant and we enjoyed a luxurious dinner…and paid with CASH.

The First Wake-Up Call…yes, there’s more than one

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I’m blissfully sitting at my kitchen table, working.  It’s 2011, late December, just before Christmas.  My husband is just home from work, relaxing in the family room, where our dog, Piggy, is curled up tight in her favorite napping spot, snoring.  Then it……well, happened. An ordinary moment from the outside, but one that would change my life more than I could have imagined. This moment would never make the front-page news or even be worthy of a Facebook status. But none of that mattered.  It was my first wake-up call. Telling me I was BROKE.

As I said, the moment was rather benign and ordinary. I get an email from my boss, saying that I’ll need to make a business trip.  “Go ahead and book everything, and submit your receipts when you get back,” she said.   The travel policy was for employees to front the cost of the flight, and the company would reimburse us after the trip had completed and all receipts had been submitted.

No problem. Let me just check my credit card statement.  (The fact that I went there first should already be telling you something.) The number sitting under ‘Remaining Credit’ caused things to move in slow-motion. $90.  That’s all we had available?  When did that happen?  Ok, maybe we have enough in our checking account. Being in the last days before  payday, we had a hefty ‘ol $52 in our bank account.

I sat there for a few minutes, frozen.  For so long, I’d always made it work.  I could usually juggle things well enough to get money from somewhere, or put it on the trusty credit card if I had to. I’d made a fairly reliable routine of paying it down “just enough” to get more breathing room.  But this time, there was no way out. I sat still and silent for a few moments. Once my reality had some time to sink in, the tears started flowing and so did the inner monologue.   “How the HELL did you get to this point?  How can someone make decent money yet be so poor?  You’re pathetic, you can’t even float a $400 plane ticket…”

I continued to sob.  Then I sobbed a bit more.  Finally, the tears dried, and I felt a surge of financial self-preservation kick in.  “This madness ends today”, I told myself.  The days of living paycheck-to-paycheck were over.  And with that, the journey began…