The Big Annual Mistake that Was Keeping Us Broke

Exciting news from the Darrling household: We are officially working on our very.last.debt!

So close. So very, very close…

We started working Dave Ramsey’s steps to financial freedom all the way back in 2015. It has been a bumpy road, mainly because we are a one-income household. We decided at the beginning of the process that me re-entering the workforce was not an option, and here’s why:

For the last decade, we have always had at least one child, if not two or three, who required childcare. I don’t have a college degree and I was making a whopping $30,000 when I left the workforce in 2011. We don’t have any local family in a position to donate ongoing childcare. Subtracting the cost of daycare, gas, and other work expenses, we wouldn’t do much better than break even. Plus, we were likely to add up more expenses with takeout, drive-thru nights, etc.

Factor in the emotional cost of becoming a full-time working mother, especially during the years when I was processing two decades of trauma and was already moderately crazy, and this was a no-brainer for us. We were not going to sacrifice my mental health for an amount of money that would have barely made any difference in our bottom line.

Realizing how worthless I am in the workforce really did wonders for my self-esteem, but I digress.

Another option would have been for me to take a part-time job, working nights or weekends. However, we really wanted to avoid becoming ships passing in the night, if at all possible. Now, if we had not been meeting our bills, that’s a new conversation. If that’s the case in your household, this may be an ideal option! We do what we have to do. Dave Ramsey, patron saint of Grow Up and Stop Whining, might have told us that it was what we had to do. But we were fortunate enough to be able to choose slower debt payoff, in service of preserving more family time, and we don’t regret our choices.

Does this reek of privilege? Oh my goodness, it does. We have been so lucky. Husbandman has been able to support our growing family, all on his own shoulders, for a long time. We bought second-hand or did without, and ate a lot of ramen noodles, but I also had the luxury of staying home with our kids. It’s a weird in-between spot.

I tried to make some kind of paltry income to contribute. I did. I was comically bad at it. I made hairbows and tutus. I gave presentations to sell cloth diapers on commission. I tried the nickle-and-dime approach with programs like SwagBucks, eBates, and Amazon MTurk. I hustled various incarnations of selling meal plans and food. This is not even the first (or second, or third) blog/website I’ve tried to launch.

At one point, a friend and I very seriously considered getting into the foot fetish webcam market (shelved, on account of my very unfortunate-looking toes). Lord help me, I even joined an MLM, which feels much more embarrassing to admit than the fact that I once nearly made ice cream sundaes on my feet for a ten-spot. My attempts to generate income failed so hard, I was basically a walking manifestation of the “before” part of an infomercial.

Me, just living my life.

Most of these projects, up to and including my most current plan to teach dance fitness classes, ended up costing us money in the long run. When it came to generating extra income, the best luck I had was finding stuff around the house to sell. This means most of my contribution to the debt-free journey has been focused on stewarding our dollars and finding ways to trim the outflow. Thus, our snowball is probably slower rolling than many others’. 

So what was the magic key that allowed us to make such big headway on our debt, in such a short time, without upending our entire lifestyle? 

Get ready, this is huge…

We decided that, as long as we carry consumer debt, our tax returns are not spending money. 

Just…hear me out. It’s gonna be okay.

I know, I know. But tax-mas! Just about everyone I know does the same thing. You white-knuckle your way through the first part of the year, until that sweet tax money comes flying in, deus ex machina. Now you can buy the things! The home goods you needed, the clothes, the kids’ activities–that date night you’ve been needing!–or maybe even a vacation. When you do without for so long, it is so tempting to just…spend it.

Being broke is emotionally exhausting. It’s hard to watch the folks around you have, and yet you…have not. You have to reject so many invitations, smile and nod when friends show off purchases, and swallow your jealousy when they post pictures of all their traveling adventures, when you haven’t gotten on an airplane in nearly a decade. It feels interminable, like you will never, ever reach the other side of it all.

Maybe you don’t get a tax return. Maybe it’s a bonus check, a commission, birthday or holiday money. Whatever you call it, it’s that little bit of “extra” money that comes in, feeling like manna from heaven, rain to the desert. It’s that chance to live like you think everybody else lives, if only for a moment, before it’s all gone. After all, you work hard, and you did without for so long–don’t you deserve nice things, too? It’s hard to take an influx of cash and just…pretend it never existed.

Spend it All First

Here’s one cool thing about your tax refund: you know beforehand exactly what you’re going to get. Take that total, and start subtracting, until there’s nothing left. This practice also works with any lump sum that you anticipate. Spend it all on paper before the money hits. This concept is not mine, nor is it new. Dave Ramsey frequently preaches the virtue of a zero-based budget, not just in regards to lump sums, but in your usual paycheck.

Why? Well, have you ever done this: 

I need to replace these shoes. I’ll do it on payday, I’ll have money then. Oh, I need to pay the kids’ activity registration. I’ll do it on payday, I’ll have money then.  I need to place that Amazon order. I’ll do it on payday, I’ll have money then. 

Do you see the problem, here? You did have plenty of money to do those things…just not all at the same time, from the same paycheck. Without adding up all those tertiary expenses and working them into your budget calculations, you’re going to end up spending more than you meant to–maybe even more than you actually have to work with. For an added thrill, make those tertiary purchases before you pay all your bills. You know what you’ll be saying next?  

Oh shoot, I need to reschedule that bill. I’ll do it on payday, I’ll have money then. 

Narrator: She would not, in fact, have the money then.

Nowhere is this mindset more ubiquitous (or more treacherous) than in refund season. How many things have you looked at and thought “Maybe at tax time…”? No, just me? 

You’re only fooling yourself.

Spend. It. First. 

All of it.

No, not at Target. On paper. Sit down, and make a list of every job you’re expecting that lump sum to do. Tally the cost. Chances are, it’s more than what you’ll have to work with (this is how we go into debt, folks) so adjust that list by priority. If you have consumer debt, guess what–your influx just got flushed. You’re going to have to pretend that money never even existed, because you already spent it, and now it’s time to pay the pickle man.

But this sucks! Indeed it does, my dude. You know what sucks even more? Donating every paycheck to the Compounding Interest Monster. Never having a comfortable savings. Living life on the hamster wheel, pushing payments back and scrambling every damn week.

It’s a whole lot easier to spend it for real, when you’ve already spent it in your head. There are no more hard decisions to make when that money is sitting there, winking at you like a saucy little snack, and emotions are running high. The last two years, we watched the money roll in, and then waved as most of it shuffled it right out the door. 

Until next year, old friend.

This year, we did set aside a very modest amount for some upcoming expenses: activity registration for the kids, and the money to make my name change legal. The rest? Off to pay for stuff we already bought that we couldn’t afford. 

Next year’s return is going to feel very different. We expect to be long out of debt by then, and nearly done with Baby Step 3. Then we can start enjoying our tax returns again, doing wild and crazy things, like…saving for a down payment for a new house. So today, I’ll watch my friends take weekends away and buy new furniture, and I’ll do my very best to not feel left out, because next year is going to be awesome.

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