A Day Late . . . .

And a dollar short. . .

Where was THIS guy during the housing boom?

Sorry for the silence, readers! I had (minor) surgery in March and boy did it throw me for a loop!

And then there's this. . . .

For pete's sake, can we get some good news over here?????

Frugal housing. . . .

Last week, I was dithering about whether to pay down my second mortgage early, or start working on my student loan. I was questioning whether, with the sad state of the real estate market, throwing money at my second mortgage was really the intelligent thing to do, since I don't know whether I'll ever get that money back (I'm thinking not).

I got some really good (and thought provoking) comments on that blog post. One of my commenters mentioned that she thinks that the market in her area (another part of Oregon, I believe) has finally hit bottom. I'm hoping that's the case for Portland, though I'm still not convinced.

That comment made me think about all of the news articles written by supposed 'experts' who predicted that we had (or would) hit bottom in 2008, or 2009, or 2010, or even 2011! It seems that those of us in the trenches (like my commenter) may have more insight than the experts! Here's a sampling of the articles I've read over the years about this very subject (I'm a little obsessed with home values these days, as are many of us):

2008: The well-known Kiplinger's predicted that the housing market would bottom out in 2008, as did the equally well-regarded Bloomberg (though, in its defense, Bloomberg was really just parroting the predictions of a bunch of bankers).

2009: My very own Oregonian forecasted that in fact 2009 would be the magic number for a bottoming-out of Portland housing prices, while Moody's (via the Wall Street Journal) predicted that 'some' markets would bottom out in 2009.

2010: Reuters reported that 'Home Prices May Bottom Out in 2010' (I love how they start to qualify their predictions with the words 'may', 'could', 'some', 'possibly', etc, meaning that they don't want to commit to anything but they know we're going to read their article anyway because we're all desperate for good news. Way to protect your backside, economic experts!) Meanwhile, Standard & Poor's indicated that 2010 would be the year housing values stopped their downward slide, though they were nice enough to tell us that we might not see values at 2006 levels until 2020! Also, there is this rather interesting graphic that shows various predictions by the 'big players' in the world of real estate values (click on it for a larger version):


And now, we come to 2011: It's early yet, so there aren't many economists making predictions in writing, but I did find this one from Interest.com indicating that 'most' experts expect home prices to bottom out this year.

What does this all mean? Well, call me crazy but it seems as if all of those 'experts' have no freaking idea when the housing market will bottom out, and never did. They're guesstimating an end to the housing crisis based on, I'm sure, years of expensive education at Ivy League schools and various economic indicators. None of which has amounted to a hill of beans, apparently.

Meanwhile, I just tortured myself by checking zillow.com and learned that my home has dropped an additional $4,000 in value in the past few weeks.

Student loan shenanigans. . . .

A few weeks ago, I mentioned that there might be a change in my student loan balance due to an inheritance (of sorts) that a close relative received. Actually, the 'close relative' is my father. Many (many) years ago when I was making some bad decisions in high school, my dad said, quote: "you get into college, and we'll find a way to pay for it". What I didn't realize at the time was that this meant students loans - for me.

After my first graduate degree was finished, my dad commented that when he received an expected inheritance, he would help me with my student loan balance (which was around $50,000 at that time). Over the years since then, I've not counted on that happening, for various reasons. One of those reasons is that I consider these loans to be 'mine', and therefore my responsibility to pay off.

However, just recently, my dad started the conversation again about how he could help me with my student loan balance. The scheme he's come up with has its merits and its downsides. Basically, he will transfer some stock to me equal to about half the balance of my current student loans. Then it will be my decision whether to sell that stock immediately (taking a capital gains tax hit), or to hold the stock with the assumption that the shares will 'split' as they've done in the past (this is stock from a major U.S. company) and will eventually - in who knows how many years - be worth much more.

The merits of this plan are that at a minimum, I'll have about $25,000 to pay down my student loan balance if I'm willing to sell the stock immediately and take the tax hit. The downside? Knowing whether to sell right away or wait and see what happens with this stock. If I wait for the stock to split (and there's no guarantee that this will happen soon, though it looks like a possibility given the direction the stock is heading) and ultimately gain value again, I could have more of my balance paid off than if I were to sell right away.

What a conundrum! Looks like I've got some thinking (and learning) to do! In the meantime, I'm going to continue working on my second mortgage debt while paying at least the interest (but probably a little more than that) on my student loan balance.

Downsizing. . . .

Since my goal is to sell my house in another year or two (depending on this fabulous housing market I find myself in), I'm starting to look around my home with a critical eye, especially at clothing and kitchen items that I've neither worn nor used in the past year. I definitely don't want to spend my last month in my house (assuming it sells) frantically getting rid of things I don't want to put in storage.

Wherever I end up, it's a good bet that my new residence will be smaller than the one I have now, and will not have a garage. Now, I'm no hoarder, but I do have boxes of things here and there that I never unpacked when I moved here over four years ago! To me, that means those mystery items are unneeded; if I've not found a use for them in the past four years, it's as it I didn't own them at all. With that in mind, why not start downsizing before I really have to?

So today, rather than cleaning my floors as I promised myself I would do, I started the task of dividing some of my unused clothing into groups of: 1. nice enough to go to a consignment store; 2. nice enough to go to the Goodwill; and 3. what is this thing even doing in my house? This last group is unfortunately destined for the trash, much as I dislike discarding anything (it's the environmentalist in me that hates to see one more consumer item sent to our already full landfill).

I'm hoping to make a wee bit of cash with the consignment goods, and take a small tax deduction with the Goodwill items. I'm sure that my 'take' will be less than the original costs of these items (I found a $70 pair of shoes I've worn maybe three times because they're too big, and a $90 pair of boots I've worn a comparable number of times because they're too tight), but it's something, right? Plus, I'm trying to figure out how I'm going to fit Christmas into my meagre budget, and every little bit will help!

Satisfaction. . . .

In November, I sent a grand total of $1,452 to my second mortgage holder, which is $1,197 more than I usually pay each month. There's definitely some satisfaction in watching my balance decrease, since up until now I've been primarily paying interest-only (I wasn't aware that this was akin to an interest-only loan when I signed the papers, by the way, though if I'd been a smarter consumer I would have learned that beforehand).

What amazes me is that in the four years that I've had this loan, I've managed to pay it down by just around $1,500. I'm flabbergasted by this.

October, 2006 starting balance: $31,400
November 2008 balance: $30,877.76
November 2010 balance: $29,881.18*

* Note: this doesn't reflect all the payments that I made in November, since some of my paychecks came late in the month.

Know what's even crazier? My November 2010 balance reflects an additional $400 in principle payments that month! So, essentially, the balance of my second mortgage has only decreased by about $1100 in four years of making regular payments!

With financing like this, it's no wonder some American homeowners are in such deep doo-doo. Loans like this remind me of indentured servitude, in which a peasant was obligated to a wealthy landowner (or other wealthy individual) until he died, because the value of his work on the land (which he didn't own) was never enough to cover the amount of his debt to the aforementioned landowner.

Anyway, this is just a rather long-winded way of saying that the satisfaction of finally watching the balance of this evil loan shrink is hard to describe. Perhaps it's akin to watching the pounds on the scale vanish with weight loss, or, conversely, watching the balance of a savings account grow exponentially. In short, it's FANTASTIC!!

Hibernation. . . .

I suppose I shouldn't title this blog post 'hibernation', as that would imply that I've been sleeping away the past six or seven months. No, I've been busy -- and that's why my hiatus has stretched as long as it has. Not that it's technically over, just yet; but I did at least want to sign back in and let anyone who's still out there (um, anyone still out there?) know that I'm alive and well! It's just that, with working almost 70 hours a week at the day job, the night job, the unpaid internship, along various attempts at socializing, life has been wacky and hectic. Two more months and I'll be calling myself a graduate school survivor -- and one without any additional school debt (let us not forget that $55K in previous student loans I'll be working on as soon as I graduate).

There has been one rather big surprise in my financial life, though. I spent at least a year padding my savings account in preparation for the year of living super-frugally. I figured out how much less money I'd be making in my last year of school, and built a savings account that almost approximated the amount of money I'd need over a nine month period. The surprise? Almost the entire savings account is still in existence!

Somehow, I managed to live on 25% less income without digging into the savings account. I had to replace my computer, and that was really my only big expense. Other than that, I pay my bills each month, on time and in full, and rarely do I think longingly of the things I could buy with the $2500 that still sits in savings -- earning a now-paltry 1.1% interest (down from the high of about 3.75% when I opened the account years ago, pre-recession). I used my credit card over the holidays for travel and gifts, and have managed to pay down the balance to a respectable $250, again without dipping into my savings accounts.

I've been puzzling over this lack of reliance on my savings account, and mentioned this to a coworker. She pointed out that I had already adjusted my spending habits when I was in 'savings mode', putting every spare penny into the bank. My spending habits have remained the same, but I'm just not saving at the same high rate I was before. That's what explains my still-healthy account balances!

In any case, I'll be moving into another financial phase in a couple of months when I graduate; as I mentioned, I'll be starting to pay down that beast of a student loan debt, I'll need to consider what (if anything) to do with my house (sell? rent? stay? move?), and looking around for jobs that pay a little better than the one I have -- which may or may not find me relocating.

Stay tuned!
p.s. hope you all have been successful in your own financial journeys during the past few months! I'm looking forward to finding the time to browse the blogs and forums again, and reconnecting with my online support group!

CNN's laughable 'budget-friendly' home remodel. . . .

I would love to sell my house at some point in the very near future, but realize that in this market the word 'future' really means a year or more, at best. In looking on the bright side of this, I'm considering cheap, easy ways I can improve the curb appeal of my home now, so that it's easier to sell when the time does come.

So I was intrigued when I saw the following link on CNN's site: Make Over Your House Without Going Broke. Upon clicking this compelling link, I found that CNN's idea of affordable is quite, uh, interesting.

Case in point:

• The very first example of a 'modest' makeover shows a beautifully redone kitchen, in which the cabinets alone cost a mere $15,000! My first thought was: Are you kidding me? This appears to be the type of kitchen remodel that Americans were doing in droves, courtesy of their home equity lines of credit, a year or two ago before the economy tanked! My idea of a frugal, 'budget friendly' kitchen remodel involves NOT spending $30,000 or more on new cabinets, new countertops, new appliances and new flooring, but instead doing something apparently quite radical---and cheap. Like painting. Or replacing the cabinet hardware. Maybe, maybe, upgrading to an energy efficient refrigerator or a new stove.
• In the bathroom, CNN's ideas are equally incredible. For example, the article recommends adding a skylight, for a mere $1,500. Granted, a skylight will open up the space and perhaps make the bathroom look a little larger, but with the economy in tatters, doesn't this seem a little, well, superfluous? Again, I'm thinking a little paint and some new towel bars are well within my price range, while the thought of purchasing a "$1,000 mirror" is simply absurd. The suggestion to "add a drain" in the middle of the floor (cost: $1,000) seems unnecessary and overpriced as well.
• Finally, CNN shares its idea of a 'smart' splurge. This includes $4,800 for a dining room table (no clue whether the chairs are included in this bargain price), almost $2,000 for a custom sofa, and nearly $2,200 for a bed. A BED. That you sleep in. Again, whether the mattress is included in this 'relative bargain' isn't mentioned. I'm going to guess not.
  

Seriously. What planet do the editors of CNN live on, that they believe people who are interested in a budget remodel would consider shelling out $9,000 on three pieces of furniture??? I'm simply astounded by this article, and it makes me wonder who actually paid CNN to write it. Home Depot? Lowes? Ethan Allen?

The only thing I can surmise from this ridiculous 'article' is that either the people who regularly cruise CNN's site are doing a heck of a lot better than the vast majority of Americans, or the editors at CNN have their heads screwed on backwards.

Frugality continued. . . .

Whew! Well, I've reveled in my lack of credit card debt over the past three days, since Thanksgiving. Now, it's time to plan for the future, which is going to require continuing my frugal ways. I do still have that student loan debt, after all. I'm just not sure I'm going to start paying it off yet, for reasons I'll explain below:

In the Fall of 2009---almost a year from now---I'll most likely have to drop to 75% of full time at my day job, to account for an unpaid practicum experience that is required in my graduate program. I'll probably need two full days during the week for the entire academic year (2009-2010) to take care of this requirement. Which means, of course, that my income will plummet during that year. I've been avoiding thinking about this complication, because I really wasn't sure how I was going to be able to pay my mortgage and eat with a decreased income. However, now that I'm credit card debt-free, I feel like anything is possible!

Here's what I'm currently thinking I'll do to prepare for this. I'm going to try, starting on January 1, to live on just my salary from the day job. Then I can 'bank' the earnings from my night job, which will allow me to dip into that savings during the year that I can't work a full time paid job during the day. This is going to require some very creative budgeting, especially since I would like to now send 15% of my earnings into my 403(b) plan, since I dropped it to 1% while I was in debt-repayment mode.

Anyway, all of this means that my student loan debt repayment will most likely need to be put on hold, which bums me out. A commenter a few weeks ago mentioned her own student loan debt struggle, and it motivated me to start thinking about getting rid of this debt. At this point, I can't even bring myself to look at my account, to see how much I owe (last time I checked I think it was about $55K). I'm scared to know. That's how bad it is.

Who knows? Maybe the economy will miraculously recover in time for me to sell my house next summer, and this will all be moot. Then I could send that savings straight to my student loan, and really get started on becoming truly debt free! I'm not holding my breath on the economy, though. . . .

As you can see, this 'plan' is a bit of a work in progress; I admit that I haven't even really worked the numbers out yet with my zero based budget spreadsheet, nor have I made the change to my retirement savings. My objective this week is to get all of this worked out, so I can start the New Year with a new financial goal.

Hmmmm. . . . .

As I continue to contemplate my status as a homeowner (and I don't mean 'status' in the "I'm superior to renters" way), I often wonder about the real benefit---especially as home values (including my own, I fear) plummet. I know that I've grown up thinking that I was "supposed" to own a home. That I wouldn't truly be successful until I stopped throwing my money down the drain by renting. And, granted, when I sold my first house in California, I did make some money---primarily because values were so incredibly inflated at that time (mid 2006).

As much as I love my cozy house, at this point, I would sell it if I thought I could and not lose money. Even breaking even would create some stress and anxiety that I'm not willing to undertake, since in Portland homes are taking an average of around 90 days to sell. In the whole scheme of things, owning a home right now just doesn't seem so wonderful. If I were a renter, I could stop working like a maniac at two jobs and put some more money in savings and retirement vehicles.

I came across an article that discusses the compulsion Americans feel towards purchasing, owning, a home. This column is written by Mark Morford, one of my all-time favorite newspaper writers. Full disclosure: Mark (since I'm one of the thousands of 'friends' on his Facebook page, I feel that I can call him by his first name) has a writing style that could be termed 'irreverent'. He puts it all out there without shame, nor does he mince words. And the words he uses! Well, let's just say he's not exactly your prim and proper newspaper columnist. Which is probably why I find his columns so delightful.

Anyway, I thought his topic was interesting today; and I loved the inference that anyone---especially an economist---who claims that remaining a renter could possibly be more beneficial than owning is the antichrist of American capitalism. This truly made me think about where my notions of homeownership came from---why I was so driven to buy when I could have simply rented happily for years. This is not to say that once I sell my house I'll never buy again. Only that I'll scrutinize the decision a tad more than I did this time, to make sure that I'm not simply buying a house to prove that I can or to feel successful or to add to my net worth in some way.

A really small house. . .

As I was searching for a home to purchase in the Portland area over two years ago, I remember thinking that I absolutely, positively, needed a certain amount of square footage in order to be happy. I ruled out anything that had less than 900 square feet, and although there were 'tiny' houses at about 750 square feet in my price range (and in attractive locations), I didn't even deign to look at them. "Much too small", I thought. "I need something that is at least as big as my house in California" (which, you may be surprised to learn, was just 1,000 square feet).

So, I ended up with a lovely 980 square foot house in a nice neighborhood that is unfortunately far, far away from where I work, in downtown Portland. Now I find myself considering selling my house in order to move 'closer in' to downtown, which means that I'll probably forfeit some space, whether I buy or rent. Now, however, a 750 square foot house sounds just fine! Since I've become more frugal, more committed to simple living, my attitude has changed. I no longer need a certain number of square feet to fit all of my stuff---instead, my stuff will just need to fit into the space I find! Now, this is assuming I make the decision to sell my house, which is by no means an easy one, in this market.

It was heartening to see, however, there there are others who feel that they can live in spaces far, far smaller than those that even I am contemplating! One of the homeowners interviewed for this article lives in a 100 square foot "wee house", located on a friend's property! In fact, a 'green builder' in Arizona has this to say:

"I'm not the Gallup poll, but I hear the same story over and over: 'We got rid of that big house, and now I have time to see my husband. Before, we used to work all week and then we'd spend the weekend on the house."

This mirrors the quote that lives in the far right corner of my blog, by Ellen Goodman, in which she laments that the new 'normal' is spending all day working in order to afford the house we don't get to spend any time in!

Now, I truly don't (at this point in my life) see myself in a 100 square foot 'wee house'. But the mere thought of it truly does help me to see that the only limitations I face are the ones I place on myself!

My housing slump. . . .

I've been considering lately whether it's a good idea to hold onto my house (which is further away from downtown Portland than I want to be) or whether I should sell it and move on. With that in mind, I asked a local realtor to come out to my house last weekend to take a look and give me her advice.

Although I won't receive the formal market evaluation until next week, the realtor seemed optimistic----more optimistic than I am, for sure! I know part of that is the fact that the realtor is a businesswoman---she needs to list houses in order to sell them, in order to make a commission and ultimately feed her family. So of course she's going to tell me that my price requirements are reasonable (I simply want to pay off what I owe, not make a profit) and that my house "shows well" compared to the competition. Actually, I do know how to make a house look attractive and cozy, so that last part isn't so far from the truth.

Yesterday, I sat and worked out the one thing I've been avoiding: If I sell my house and end up renting, how much more will I pay in taxes, without my mortgage interest and real estate tax deduction? Turns out, my taxes will double (disclaimer: I'm not a tax expert, nor am I particularly great at math, but generally I try to be more conservative when I'm inputting numbers that will lead to a tax estimate).

At first, I blanched at the thought of paying more taxes. Then I considered that, with my relatively low salary, I really don't pay THAT much in taxes anyway, compared to people like my brother and his wife. Then I wondered how I could offset those taxes. Well, I could increase my contributions to my 403(b) plan. I had been putting between 10-12% of my salary into my 403(b); in April, I cut that to 1% until my debt is paid off. Without a mortgage to pay, I could put a whopping 25% or more into my 403(b)---with money left over for travel and other fun pursuits---and reduce my tax bill quite a bit. Not as much as my mortgage interest would, but the savings would be substantial, AND I'd be investing in my retirement at the same time. By the way, I use an incredibly useful tool called Paycheck City, with which you can play around with your withholdings and view your net pay under all sorts of different scenarios.

So the inner dialogue continues. I'll revisit this next week, once I've received the formal market evaluation. My parents are coming for a visit the week after next, and I'm sure I'll bounce some of these ideas off them as well (they're not known for financial 'astuteness', but it's always nice to hear a second opinion).

Have a lovely, relaxing, Labor Day weekend, everyone!!

I'm out of practice. . . . .!

August is my month! My month to get back on board with tracking my money (what comes in, what goes out, and what stays in savings. . . .). So far, it's been very difficult to get 'back on the wagon'. Once I stopped paying attention to where every penny was going, boy did they GO! June and July were just a whirlwind of socializing, school, travel, and spending. I've had a great time, but my bank accounts have definitely felt the difference. I didn't understand what a huge influence my money-tracking ways have had until I stopped doing it for a couple of months.

One thing that truly reminded me of how important this really is was a recent appointment I had with a mortgage counselor. I've been considering renting my house out, and either purchasing (hence the mortgage application) or renting a place "closer-in", meaning closer to downtown Portland. I love my cozy house and yard, but am getting tired of being so far from work, from school, and from friends.

Anyway, in the course of this appointment, it became clear to me that my money-tracking ways over the past eight months have given me a much better sense of how much money I really have to work with on a daily, weekly, and monthly basis. The counselor gave me a 'payment shock' worksheet to complete, in which the mortgage applicant estimates the cost of the mortgage in combination with other monthly bills such as utilities, food, and entertainment. I was able to very quickly estimate how much I spend in each of these areas, because I now know how much I 'average' per month in spending. It felt great! I described my expense worksheets to the counselor, and she said that I'm in the minority---most people really don't know how much they're spending on necessities, let alone on fun stuff like clothing and travel.

That definitely felt good. For about five minutes, until I realized how easy it had been to let my good habits fall by the wayside once the sun came out in Oregon. Will summer always be my most difficult 'frugal' time? I've definitely spent much, much, more on entertainment than probably during the previous eight months combined. And 'forgetting' to write these expenditures down or enter them in my worksheet was probably just my subconscious making sure I didn't start to feel guilty about living my life and having fun (at a cost).

So, once again, now that it's August, I'm back on the frugal bandwagon. I may spend more than I did in the rainy months of fall and winter, but I'm going to try to keep track of that spending, regardless of the guilt factor.

Frugal emergency. . .

My parents live in Northern California, in a small town that is basically surrounded on three sides by wildfires right now. Since the town is located on a ridge, there are limited options to escape if all roads are cut off by fire. At one point yesterday, a man came and pounded on their door, letting them know that they needed to "get out, and immediately". While packing up the car, my dad saw some search and rescue officials driving by in a truck, who told him that while they needed to be prepared, they didn't need to leave right away. Judging by the news reports today, it appears that the fire will be contained by Monday---unfortunately, approximately 65 homes have been burned, along with more than 20,000 acres.

I happened to see the news stories yesterday afternoon, and gave my parents a call, which is how I learned all of this. My mom was extremely calm, doubting that the fire would make it to the center of town, where they live (although they do live close to a canyon where the fire was raging below). I was curious to hear what my mom considered 'crucial' items to take with them in the event that they did need to evacuate.

She was incredibly blasé about the entire thing. She said they had packed up the computer, irreplaceable photos and documents, some clothing, and were prepared to get the dog and cat into their crates if need be. She said "really, those are the only things that have any importance. Everything else is just stuff".

Last night after I had talked with my parents, I looked around my own house, and thought about the things that really matter to me. Some photos, my passport and ID, my journals, my cats. That's about it. The rest, while comfortable and attractive, really is just stuff. I'll need to remember this as I struggle over the decision to move to a smaller (and cheaper) place (although, my little house is already less than 1000 square feet).

What would you take if you had to leave your home on short notice?

Apropos of yesterday's post. . . .

For my night job, I read a lot of online newspapers and magazines, many of which are from international papers. It's interesting to read the opinions that journalists and citizens of other countries hold about the United States, and the financial and environmental issues we all face.

Yesterday, I wrote a post highlighting the fact that many Americans are increasingly choosing to take public transportation to work, rather than spending the cash to fill up their gas tanks every week. Lo and behold, last night I came across an article from a British paper, commenting on the opinion that our next U.S. president, whomever that turns out to be, should follow in the footsteps of the UK and other European countries, in reducing congestion and sprawl. I have to say, I studied abroad in Europe on two separate occasions, and I rode my first city bus, my first 'metro' (subway) train, and my first passenger train while in Europe. I also, by the way, benefited from universal health care systems, which were great (don't knock it 'til you've tried it, folks)!

Apropos of a comment left by a reader yesterday (thanks, Leonard!) regarding home energy savings, I also came across an interesting article about an 'eco-home' in the northern reaches of Great Britain. Amazingly, the entire house uses FOUR lightbulbs (LED), and although this house is located in a town that is at the same latitude as Alaska and Greenland, the owners haven't used the heat in three months! This is due to insulation with compressed foam, and argon-gas windows. From the article, it sounds as if the cost would be prohibitive for people like you and me, but imagine if this type of home insulation were affordable! My optimistic side thinks that sometime in the next two decades we'll all be living in homes in which eco-friendly add-ons are the standard.

As for me, I had an energy audit done on my house last year. Improving my home's insulation was first on the list (I actually don't believe my 50's home has ANY insulation, and since I have a flat roof, I don't even have an attic in which I can easily---and affordably---add some), along with replacing the aged water heater and the furnace. These projects are a little out of my price range at the moment, but I'm keeping them in mind for the future, when I've paid off my debt and beefed up my emergency fund. The best part about the energy audit, aside from the fact that it was free, was that the technician brought a giant box of CFL lightbulbs, and proceeded to replace most of my old lightbulbs, also at no cost!

Frugal economy. . . . .

CNN has an ongoing series that profiles American families and how they're reacting to our slowing economy (i.e., the recession). It's called 'America's Money: In their own words' Today's profile caught my eye, because it's written by a man who is working a second job, to "pay the bills", just as I am.

I really wish these profiles were a little longer and more in-depth, because I'd love to know several things about this person: for example, just how much (or little) does a Vice President make? Is he truly living a "lower middle class" existence? Does the wife work? Do they have overwhelming student loans or other debt? A giant house? Is he driving a gas guzzler, since his gas bill is $170 a week (mine is $30 a month)?

I'm trying hard not to automatically judge this person and make assumptions about how his family is living. I look at my own situation (also working two jobs) and realize that everything is relative, after all. I have access to great public transportation (hence the lower gas bill) and make use of it. I have a wonderful public library where I can stock up on books, read magazines, and study in a warm and inviting atmosphere. I live in a tiny house, although with an admittedly too-large mortgage compared to my income. My car is old, but efficient and reliable. I have access to great health benefits, retirement plans, and tuition remission through my employment. Yes, I'm working two jobs, but I feel like I'm squarely middle-class.

It's interesting to read about how others are handling their own financial struggles, if only to help me realize that I'm not doing all that badly. . .

Vice president of information technology, 32, Denver, Colo.

We purchased a home last year and I'm proud to see my children live in a decent neighborhood close to a good public school and have a backyard to play in.

However, since moving, unexpected expenses and rising costs have created a situation of struggle. I do have a fixed-rate mortgage, but everything else is getting so expensive. Last week I spent $170 on gas alone. I've taken on a second job, and I know as long as our economy hangs in there and doesn't collapse, we'll be okay.

My biggest frustration is I work very hard to maintain a lower middle-class income and lifestyle. We don't go on vacations, or rent movies. We just hang out and do free or cheap stuff. But I still work a second job and I miss out on school events and struggle to feel okay explaining this to my son.

April zero-based budget. . . . .

I've found that a zero-based budget is working fairly well for me, although it does require some tweaking throughout the month as unexpected expenses arise. I also need to think about my 'fun money' allocation, as it seems that I use this money for items that I wouldn't normally consider fun (like the notebooks I'm going to buy today for my classes). As usual, I'll be updating this throughout the month.



Here are the links to my February and March zero based budgets, for comparison.

How I squandered my financial fresh start. . . .

New here? First read The Early Years, and then The Middle Years. . . .

Once upon a time, almost two years ago, I was debt-free (except for my student loan). I sold my house in California (just a wee house, in a rural part of the state---so my ‘take’ was less than $50,000 after three years of ownership). With the proceeds, I paid off my car, my credit cards, and my home equity loan, leaving me with about $15,000.

I took a giant breath and moved to Portland, Oregon, to start a new life and a new job (at a lower salary---but hey, I was debt free, remember?). Somehow, I now find myself once again a slave to credit card debt, saddled with a mortgage that is probably too large for my salary, and with over $50,000 remaining on my student loan. How did this happen?

I was so unused to having money in a savings account---an actual cushion! It felt so great, I was loathe to spend any of the money on piddly, every day stuff. So I used my trusty credit card when I visited Target, Home Depot, and Bed, Bath & Beyond, knowing that I had the money to pay it off every month----which I didn’t. Pay it off, that is.

I then used much of my remaining ‘house money’ to purchase a house in Portland---now, granted, the home I live in is even smaller and cozier than my California house, and cost less than the sale price of my California home----but it cost over $60,000 more than my first house originally cost, and with me at a lower salary than I was then, the mortgage payments now seem almost overwhelming. And of course, you know what happens when you move into a new house or apartment, especially if you’re an ‘owner’! There are needs, after all! More trips to Target, Home Depot, and Bed, Bath & Beyond----adding to my creeping credit card debt.

Each month, as I continued to live as if I hadn’t just bought a more expensive house on a lower salary, I would take a little here and there out of my savings account, to cover dinner out with friends, or the electric bill that came due at the end of the month, or the auto insurance premium that I hadn’t thought about until the day it arrived in the mail. And so it went. Until my savings account was so meager I began getting nervous. Which was a good thing, because that anxiety caused me to re-evaluate how I was living, and most importantly, how I was spending.

I think the combination of ‘starting fresh’ two years ago, a new outlook on life---free of credit card and auto loan debt, after all---and actual money in my savings account served to create a false sense of financial security. I bit off more than I can chew---almost. I am, after all, ‘making it’, as they say. I am paying my mortgages and other bills each month on time, and I’m even finding ways to pay off my credit cards---for the last time.

I now realize that I squandered what could have been my ‘financial fresh start’. I can kick myself for letting this happen, or I can learn from it---I choose to learn.

How big is too big?

I ride the local MAX (our light rail system) back and forth to work, and I am so entertained by some of the conversations I overhear from time to time. Some of them make me laugh, and others make me think.

For example, this evening as I was on my ride home, I overheard a man talking about his "giant" house. Apparently, he and his wife own a 4500 square foot house----for the two of them. They only use 50% of the rooms, and the master bedroom takes up the entire second floor of the house. They have a three-car garage, and the man stated that he didn't really like the town they lived in; it was too "country".

There were so many questions I wanted to ask (but couldn't, as that would have tagged me as an eavesdropper): Why did they buy such a big house? Were they going to have children, and thought they would potentially use all of that space? Were they going to be caring for aging parents soon? Why did you invest in such a large home, in a town you didn't like? How do they justify the money spent on electricity, maintenance, insurance, and other costs of heating/cooling/protecting the house?

I'm trying not to be judgmental of this man and his wife. Maybe they had really good reasons for buying the McMansion. Maybe they bought, and realized it was way too much house for them. Maybe they can afford it, and don't mind heating and cooling a 4500 square foot house when they only use 2250 square feet of space (by the way, a 2250 square foot house is still over twice as big as my own little abode).

I'm so grateful for my cozy little house----it's expensive relative to my income, and I may have to sell it and downsize sooner or later, but for now it's the perfect nest!