Less than 24 hours after I posted Using a Budget: Cutting Costs a suspiciously important looking envelope showed up in our mailbox. A recent article stated it will cost upwards of $400,000 to raise a child (before paying for college!) and I had wondered how that was possible. Sure, we have to buy diapers, bottles, baby food and some other items, but all in all we've only added about $200 per month to the budget since Finn arrived, which equals $43,200 over the course of 18 years. I knew that would increase as he started school, sports, and other activities, but how could it possibly creep up to $400,000?!
The envelope was an overdue notice from the electric company. Apparently, running a space heater everyday for three months straight causes your budget plan with the electric company to change. Long story short, we didn't realize the budget plan wasn't automatically adjusting to our usage and we are around $600 behind in payments. It might not sound like a lot, but when you're only $4,275 away from being done with credit card debt, it's a big deal. The woman at the electric company was very kind and in her attempt to make sense of the increase she asked, "did anything change last winter? For example, did you have a baby?" She told us that running a space heater for 8-10 hours a day will add (on average) between $100-$150 per month to an electric bill. She told us they would happily adjust our budget plan to meet our current usage, but we would need to make some sort of catch-up payment first. To the envelopes we went.
The "Home" fund had $181 and the "Auto" fund had $240 but since tabs have already been covered for the year, we decided it could give to the cause and donate $20. We made a catch-up payment of $200 and the remaining overdue balance will be spread out over the next year, increasing our monthly bill by $40. Lesson learned, no more space heaters.
A year ago we would have put the $600 overdue balance on a credit card, and although increasing our monthly payment isn't ideal, we were just thrilled to have cash on hand to cover some of it. There was no need for an argument, we knew exactly what we needed to do.
When we started paying off the debt for the first time we consolidated some of our smaller credit cards onto a Chase card that offered 0% interest on balance transfers. The goal was to pay off the balance by the time the 0% interest offer expired because if you don't, you get hit with an 18% interest charge (which backdates to your original balance). We didn't have a zero-based budget and were easily distracted, so when we weren't able to pay it off we transferred the slightly smaller balance and the balances from two other cards onto two more 0% interest cards, this time with USAA. It was in month seven of eighteen that we went through Financial Peace University (FPU)... we were on our third attempt to pay off the debt. We finished FPU in March 2014 and fully implemented the zero-based budget, envelope system, and cut up the credit cards; we had $19,350 in credit card debt. We have until December 15th to finish paying off the remaining $4,275 before the promotional offer expires.
We are in the home stretch, and because of that there will unexpected costs that arise and the only thing to do is laugh and say, "well that wasn't in the budget." We are choosing to be thankful for these reminders of where we came from…it's minor setback, no reason to throw a Chinese food themed pity party (like many times in the past). There have been several times in the last year when the bank account should have been empty, but it wasn't. God has been faithful to us thus far and we know he will continue to provide.
"Yet what we suffer now is nothing compared to the glory he will reveal to us later."