Finances (It's Easy To Juggle When You're Juggling Air... Or Is It?)

I have a lot of debt and very little income. I don't stress out about it more than necessary. I am not in good health right now and I won't go killing myself to scrape together a few more dollars. I accept that my debt is going to be with me for a while so I don't get into a panic when the monthly bills arrive. Mostly, I have been able to pay the minimum payments on the credit card bills and pay the utilities in full every month. Of course, I do this by dipping into my line of credit. That thing is a life saver.

Yesterday I got a letter from one of my credit card companies saying that because I have managed my account so responsibly, they are offering me a credit increase. I saw right through their dirty little scheme. It has not gone unnoticed that theirs is the only one of my credit cards where my balance grows each month even though I don't use it any more. I only have one card that I use now, and I am trying to pay that one off in full at the end of each month. On the other cards, the minimum payment covers interest plus a little bit more, so every month the balance inches down and I pay a little less interest on what is left.

On this particular card, the one that is offering to increase my credit limit to $20, 000 (and no, before you even ask, I am not accepting their offer!), the minimum payment is actually less than the interest I have to pay, so the balance inches up each month. Every month I have to take a good look at my bill and make sure I pay enough to cover the interest and I add a little bit more whenever I can. This is the card that I really want to pay off. Unfortunately, it is also the one with the biggest balance, over $10, 000.

Like I said, I am not spending too much time agonizing about my debt. Debt is inevitable in my preset situation. However, since I recently submitted my income tax declaration, I was looking forward to getting a sizable tax refund from the federal government. I am sorely disappointed to see that the amount in its entirety has been transfered to the provincial level to repay an amount that I owe. I am not saying it isn't fair. It is. I know they have every right to do this. Still, I was hoping they would at least let me keep a portion of it. It would have come in very handy to put on my growing credit card bill.

Well, it's a good thing I didn't count my chickens before they hatched. Luckily I had the foresight to put some of the money I earned last month away instead of paying it all into my bills. So I do have enough to make the minimum payments this month, but sadly I won't be making that one big payment to get that one annoying credit card company off my back. Such is life, I guess.

On the up side, with the amount I owed to the province of Quebec reduced, (it was money I owed on an overpayment of the Solidarity Tax Credit), I should hopefully start receiving regular payments of the Solidarity Tax Credit to which I am entitled. Hopefully. I am not sure how long it will take the different levels of government to communicate between themselves and finally let me have the money that I need. I hope it won't be too long.

In the meantime, I will make my phantom payments to my line of credit and then use the credit to pay the credit card bills. (By phantom payments I mean that when I get money, I put it into my line of credit so that the account registers the payment, then I withdraw the money immediately and make payments to other accounts with it. The line of credit balance doesn't actually go down, but at least it registers that I am "managing the account responsibly" (lol) by always making some payments. Which I withdraw immediately after. So it's like canceling the payment, but whatever. Juggling air. I am juggling air. Magic!

The trouble with juggling air is that eventually the Line of Credit Balloon is going to pop. I will reach the maximum limit on that account and I will no longer be able to juggle money through it. So really this strategy is only a temporary fix. I try not to think about it too, too much, for fear that a lump of panic will form in my throat. I do liken the situation to The Little Dutch Boy. I don't want to drown in debt, but I don't know how long I can hold back the water.

Counting Your Chickens

I had never cared much for or about money until I suddenly became low-income. When I was married my husband was pretty much in charge of our household finances. He paid the bills, he made the investments. My only contribution was the paycheck that went into our joint account. When I left him, I thankfully and miraculously landed a well-paying job and since my main focus was helping the children deal with the separation, I shelled out a lot of dough to make our new apartment feel like home and to make sure they had everything they could possibly want and need. From bicycles to private daycare to horseback riding lessons, I was now the main provider. Now that I am counting every penny, I am much more aware of how much money I (don't) have. I wish I had been more responsible with the money I had, putting more into savings and less into long weekends out of town.

This weekend I spent a little time online looking into how to make a budget. I came upon some interesting software that I unfortunately couldn't download because my old comp couldn't support it, but I also read some articles on the subject. Mostly, I was bummed to see that I really couldn't apply the budget to my income because really it all gets eaten up by the must-haves. I can't make my minimum payments, let alone put money aside for savings.

Nevertheless, I have decided to share with you the simplest, easiest to understand budget that I came across. This is how you are supposedly to distribute the money you have. It is called the 50-30-20 Budget.

First of all, you are to calculate this budget based on your income after taxes. 50% of this income can be spent on what are called "must-haves". This is where I get into trouble, because my must-haves take up about 150% of my income. Seriously. Anywhoo... "Must-haves" include essential things like your rent or mortgage, utilities and telephone bill, daycare, groceries, gas, insurance and any minimum payments that you have to pay for credit debt.

The second group of things that you spend on are the "wants". Wants are non-essentials such as taking a vacation, dining out, entertainment (CONCERTS! oh! how I miss going to concerts!), cable and internet access and any extras you get for your phone service such as voice messaging or caller ID. Oh, and I forgot clothes. I never buy those anyway so they slipped my mind. Sorry!

According to budgeting experts, you should spend 30% of your income (after taxes, remember!) on your "wants". I am actually pretty good about these things, since I don't have cable tv and we never really dine out or spend on entertainment. (Thank goodness for all the free passes to museums, etc. that we can get from our municipal library!) We have also, for lack of funds, stopped vacationing out of town. We spent March break doing (free) things right here in the Outaouais. As for clothing, the kids inevitably need bigger clothes, but the Saint-Vincent-de-Paul is really good for cheap second-hand clothes and I can use Airmiles in exchange for gift cards to stores like Gap Kids, where Daughter likes to shop. Add to that the fact that my sister is generously paying for my internet access, and I think I'm good.

The last 20% of your after-tax income should go to the "savings and debt repayment" category. Basically, if you are debt-free, you should be putting this money aside for your retirement, a special vacation or as emergency funds. Emergency funds are what I wish I had put aside for, now that I am not able to work full-time.  :/

If you do have debt, then you use the last 20% of your income to make payments that are over and beyond the minimum payments required by your credit cards, credit lines and bank loans. (In my case, there is also still a student loan.)

So there you have it. I am not sure where in there I would fit the kids' allowance and the fact that I need new kitchen chairs because the boys have destroyed two of the ones we have. This is where I come to counting my chickens.

Last fall, when both boys outgrew their bikes, I discovered kijiji. Since then, we have sold a few items online. My daughter sold some toys that she has outgrown and she got to keep the money to put in her bank account. I have also sold some excess furniture that wasn't doing much more than taking up space, as well as outgrown booster seats and horseback riding boots. Stuff like that.

Inevitably, if you post stuff on kijiji, you eventually end up browsing to see what is available. That is how we found my first son a BMX bike (which his aunt actually paid for) and some books that he spent his own money on. I have found some kitchen chairs at six bucks a piece (picking them up tomorrow night) as well as numerous other items that would definitely fall in the "wants" category. My problem is that I am so happy to find things at a good price, I want to buy everything and that, ultimately, would cost me a ton. Nevertheless, once I sold the train table we no longer used, for example, I used the money to but a bathroom mirror, because the tiny one we had was so small the boys couldn't even see themselves in it unless they climbed up on the counter. Besides which, I have always wanted a Greek style bathroom and this mirror fits perfectly.

Now, this weekend I sold my son's booster seat for twenty dollars, so I figured I could finally buy the four kitchen chairs, which will come to $24 total. But once I gave Daughter the money I owed her for chores and sent the kids to the dépanneur to buy icing sugar, most of the money is gone so I have to get some out of the bank to get the chairs.

I am such a scatterbrain that not only do I count my chickens before they are hatched, like agreeing to go get the chairs before I even got the payment for the booster seat, I also forget all my debts, large and small, and spend money that I should really put in the bank to make credit card payments. However, I do believe that a healthy life is a balanced life. So, regardless of the fact that I should really keep to the strict minimum (really! we could just picnic on the living room floor!) I do spend more than I ought to. Is this responsible? No? Do I care? Not really, although sometimes I wonder...