Everyday Goddess

Blogging Bankruptcy: Year One, Financial Goal Setting

When you declare bankruptcy these days you have to go through (and pay for) two sessions of mandatory financial counseling. You can do it online. I took my courses at Greenpath.

I'm actually (ironically?) fairly financially savvy, and the courses were very basic, so I there wasn't too much I didn't already know. The exception was the things specifically about bankruptcy itself, because no one talks much about it. I imagine this is because you don't really want to encourage the entire country to declare bankruptcy, but all of that information was very much, I wish someone had told me this three years ago. Heck, nine years ago.

I believe that the number one regret about declaring bankruptcy is not having done it sooner.

So, for the most part the financial counseling was just a hoop for me to jump through, but it was kinda nice to get a little financial refresher as I was starting to look towards post-bankruptcy life. It did get me thinking forward, which was good.

In particular, I was excited to think about financial goal setting post-bankruptcy. For much of my life, I've sent between $600 to $1,000 a month to debt, so it felt like bankruptcy would be more of a relief, but the reality is that my decrease in income since 2009 (20%), in addition to the decision to move into my own apartment, means I don't have all that much income to play with.

I thought about how great it would be to start to invest. But I don't have available funds for that right now.

I thought about how great it would be to contribute the yearly maximum to my HSA (health savings account). But I don't have available funds for that right now. (I put in about $100/month and have been using that to pay medical bills this year - lots of catch up in terms of dental, etc.)

I thought about how great it would be to save 2-3 months expenses in my savings account.

Then I thought about how great it would be to save $500 just to start.

Then I thought about how it would be a pretty reasonable goal to just not touch the $25/month that gets automatically transferred into my savings account. That would someday add up to $500. It would be a start.

So every month, when I transfer that $25 back into checking, I remind myself that it's my money, and it's my cash that I'm spending. And it's cash.

And I've started paying on my student loan again, which is now more than I borrowed and at the current rate will be paid off in about twenty years. But, I'm making the payments. And I have a goal not to ever put my student loan in forebearance again.

Looking over my first year since the moment I stopped using and stopped paying my credit cards - call it my first year I stopped working for the banking industry, student loan aside - I wish I could do more. I wish I was better off. I wish I had the ability to be pulling off more substantial financial goals in this first year.

But October marks one year I've lived without credit cards since I was 18 years old. This year I got my car air conditioning fixed, my cavities filled, and paid for the bankruptcy itself, which with a lawyer came to almost $2K all together. And I did that all with cash.

I have a really tight monthly budget and much like when you start counting calories, when you have only your cash you really begin to understand how much money you actually have and how you actually should be living. I intimately understand now how debt creeps up when your budget is really tight and credit's sitting right there saying, What's a little run to the grocery store two days before payday? Every month.

Because now, I have no choice but to raid my cupboard and eat beans from a can if that's where I've gotten myself. Frozen peas and brown rice, people. It's a revelation.

And it's really painfully easy to say no to awesome opportunities when you flat out can't pay for them. No way, no how. And, life goes on. It's not good, but it is what it is.

I'm 41 years old, and this past year I learned a lot about life without credit. I thought I would feel richer, but most days I don't really. It feels like everyone else has more money or credit or both, so when I'm down to less than $10 before payday it certainly feels like I'm a broke ass, and that's discouraging and frustrating. But I prefer this life to the one I had before. It's amazing and empowering not to have credit card debt. And I never want to go back. I don't want to work for the banking industry ever again.

One year down without credit cards. A new life with just my student loan debt and a lot of possibility for growth moving forward. It's a solid foundation.

So I thought about surviving and learning to live with the money I have today and covering some expenses I'd been having to put off, and I decided that that was a pretty good financial goal for Bankruptcy: Year One.

2010: In Which I Blow My Bottom Line To Hell

First, I took a temp gig in the Awards Office at Sony. Clearly, getting laid off wasn't anything I controlled, and I'm sure I made the right decision when offered this gig. I've always wanted a job at a studio, I'm learning tons, the job is busy and rewarding - in short, I love it! Not to mention the opportunity to work to support films I really believe in (my favorite 2009 film is District 9), on a lot and at a studio that it turns out I really like.

But, I *don't* love paying $300/month for Cobra because the temp agency I actually work for only offered limited benefit health insurance. (Sure, go to the doctor! But if it turns out you have cancer, don't call us.) Now mathematically speaking, even with Cobra health insurance at $300/month I am making more than I was on unemployment. But my stress level about my pending unemployment (this gig ends March 12th) is definitely ramping up at this point. In no small part because...

Then I moved into my own apartment. Again, the catalyst didn't come from me - my previous roommate got a cool opportunity to move, and then I had a decision to make. Again, I'm convinced I made the right decision. I don't think I really grokked how completely uncomfortable I was until I got my own place. Now I'm getting more work done at home... and feeling much more relaxed, too. Words can't convey the deep level of happiness I feel now that I have my own place.

But, the net difference to my bottom line is $277 more a month. Until the first year is up, then it's $377 more a month. And, btw, this means I will be COMPLETELY broke when I go back on unemployment. Like living on beans broke. And if I can't go back on the Cobra subsidy for the last 3 months they're offering it - I'm waiting to hear back from my Cobra on this - then I will have to start putting my health insurance payment on a credit card immediately. So that's awesome.

AND THEN

I quit my contributing editor position at BlogHer. My last post is this week.

OMG, right?

It felt like the single biggest decision I've made since moving to L.A. I could hardly breath the day I decided. And so I wish I could say it was a difficult decision in the sense that I was conflicted - but when it came time for it, I wasn't conflicted at all. The constant need to work every Thursday night on something unrelated to directing was really getting to me. What I want is to be a director, and so I'd rather use my Thursday nights to write, or read screenplays, or sketch, or watch a movie, or simply relax so that when I do write or go to something directing related I'm not totally exhausted.

I've been so totally exhausted for years and years.

And I'm ready for this journey to take as many years as it takes (or to die trying for that matter), but my goal this year is to do less, more targeted things in the hopes (always in the hopes) of creating more forward movement.

Which should be easy (the doing less, more targeted things anyway), considering I'm totally broke and just desperately trying not to fall back down the rabbit hole into life crunching debt. As opposed to the - um - "manageable" debt I'm still working on. And I guess it just seems like if I'm going to be broke again, I might as well rip the band aid totally off.

Here's the latest update on my directing site btw. Did you watch Earth Force 5?

The point, however, is this - I honestly believe that these were all good decisions that I needed to make. Even while it totally goes against my upbringing in the sense that I cannot afford these things. I have no business taking a temp job with no benefits. I have no business moving into my own apartment when I could be using that money to pay off more debt. I have no business throwing away a lucrative job that was only one night a week.

Except.

Maybe I can't afford not to do these things. How am I ever going to become a working director if I don't do these things?

That feels right.

I hope it's right.

Oh, and one more thing - Academy Awards nominations are tomorrow... COME ON DISTRICT 9!!!

Two more drugstore brands later, I gave in.

Here's an interesting post from Wise Bread: On choosing and defending your luxuries.

Putting My Money Where My Mind Is: Choosing American Airlines over Southwest

So there's this little conference I go to in the summer called BlogHer. When I first priced the plane ticket on American Airlines, it was over $500. I cried a little inside.

And I waited. And it went down quite a bit, and then by the time I could purchase it, back up a little. I ended up with a ticket for $400.

Southwest Airlines would have been significantly cheaper. But I have finally arrived at a place in my life where I don't have to purchase plane tickets based solely on price. (Hallelujah!) Finally, I was able to consider other issues that are important to me when purchasing a plane ticket:

1. My miles are with American. I'm likely taking a personal trip to South Florida this August (Hallelujah again!), and by the miracle of miles, acquired slowly but surely, I have actually earned a free plane ticket. So I'm liking that. American flies the places I am most likely to go in any given year.
2. I hate the Southwest air bus concept. I want an assigned seat. (Although at the moment aa.com won't let me see the seat map to change my seat which kinda blows. I'll have to give a call, it seems.)
3. I prefer to fly into O'Hare where I've been once and am familiar with taking the train into Chicago. Southwest flies into Midway.
4. And a big one for me, these situations just really turned me off Southwest Airlines:

Assvertising: The Sports Illustrated Swimsuit Issue Edition (Shakesville)

Come fly the slut-shaming skies (Feministing)

Now, I haven't always had the world's best flights ever on American, and I'm certainly not a huge fan of the bag fees. But I am familiar with the terminals and usually check-in and boarding go like butter. So despite the (strong) allure of a cheaper ticket, I'm flying American Airlines to BlogHer. Here's hoping for a peaceful, on-time flight.

Goals Update: Reading, Writing, and Arithmetic.

Reading

So, I'm on track so far for my goal of reading 24 books in 2009 (12 fiction and 12 non-fiction). In April, on the nonfiction side, the good news is that "He's a Stud, She's a Slut, and 49 Other Double Standards Every Woman Should Know" was such a quick read that I've got like a month and 3 weeks to read "The Omnivore's Dilemma: A Natural History of Four Meals." The bad news is, reading about 50 double standards all in a row is rather depressing, even though Jessica Valenti is funny.

Writing

In screenwriting news, I wrote four out of five Tuesday evenings in March, missing my goal for the month by one. On the Tuesday I missed I was pitching webisode concepts to a friend, so I guess that's pretty much the greatest reason ever. :) In April I've got four Tuesdays and my goal is to beat out my adaptation on index cards using the system described in "Save The Cat! The Last Book on Screenwriting You'll Ever Need." I'm tackling a quite challenging adaptation, and moving into the second half I've been feeling a bit lost so I definitely think this will be time well spent.

Arithmetic

I got my taxes done and pulling my business expenses together was as much of a nightmare as ever. I've decided that this is the year I get my business expenses organized throughout the year. I'm using a small business American Express card for most of my business expenses, and my goal in April is to download some accounting software and organize my business income and expenses so far this year. I'm totally dreaming of 2009 business taxes that are a breeze...

Note To Self Regarding Next Year's Tax Return

Congratulations, you filed your taxes! And it only took, all told, about 10 or 12 hours. And a piece of your heart soul mind.

I swear, in April, you will get a program or use a spreadsheet, and you will organized your business expense thus far this year. And then you will keep up with that. Because I seriously can't do it this way again

Reviewing Kiplinger’s Financial Commandments for your 20s... in my 30s

OK, so yesterday I reviewed the 10 Financial Commandments for Your 30s by Erin Burt, contributing editor for Kiplinger.com. At the end of my post, I posited that 37 in the Los Angeles film industry is in many ways like 27 in other areas and industries, so today I'm going to review the 10 Financial Commandments for Your 20s, if for no other reason than to make myself feel better.  (h/t Get Rich Slowly)

1. Plan ahead - This is difficult for me because my life at any point could be one of two things. I could still be an executive assistant, or I could be a working director. Needless to say, these are very different financial situations, so I tend to focus on short term goals. OK, so five years? No credit card debt and a real emergency fund.

2. Live within your means - I think I'm finally pulling this one off. It really helps to have some means. I'll also throw in here that this post from FrugalDad really spoke to me recently: Complacency A Silent Killer Of Financial Turnaround.

3. Make saving a habit - I did this last year, but right now I'm not really saving at all due to a 15% pay cut at work. I do still have my "keep the change" savings account growing by pennies, and I don't spend that.

4. Pay off your credit cards - This should be totally doable in the next five years. I've made major progress on this front in terms of consolidation and interest rates, and I've stopped using credit completely.

5. Start investing - I used my first 401K towards graduate film school. I started a new one last year, but right now my contribution is 0%. Sigh.

6. Establish credit - This one I've got. I've been buried, and I got into a spot of trouble with American Express like a million years ago, but my credit score is pretty pleasing to me at this point.

7. Have a marketable skill - While the gamble on that expensive film degree is still on the table, my marketable, transferable skills as an executive assistant have indeed served me well. I had no problem finding a "real" job in Hollywood to pay my bills, and if the entire entertainment industry takes a Titanic-sized plunge into massive depression, I can do my job for anyone in any field. It's one of the reasons I'm an executive assistant by day. Totally Transferable Skills.

8. Cut the financial umbilical cord - LOL and that's all I'm gonna say about that.

9. Marry wisely - Well, that's very easy advice to give, difficult to execute, if you're even getting married at all. Or even able to legally marry who you want to marry. That said, I did enjoy her Ten Questions to Ask Before Saying 'I Do'. You really do need to have those conversations. Oh, I sound jaded. OK, Marry wisely - I'm working on it. Would be nice.

10. Have some fun - Seriously, she isn't kidding. I work my ass off, and if I didn't have a little fun sometimes, I think I'd keel over from the weight of it.

So, I'm 37 going on 28, and when I look at both the 20s list and the 30s list and all things considered, I'm not doing *that* bad. I really wish I was farther along, but I'm going to stay focused on making good choices and moving forward. It's frustratingly slow, but it is what it is.

I work really hard. I've got faith it's gonna pay off.

Reviewing Kiplinger’s Financial Commandments for my 30s

So Erin Burt, contributing editor for Kiplinger.com, first wrote 10 Financial Commandments for Your 20s, which I will not pain myself by reviewing. Instead, I will pain my 37-year old self by reviewing her 10 Financial Commandments for Your 30s. (h/t Get Rich Slowly)

1. Pay off your non-mortgage debt - Yeah, there was a window where it looked like I would be able to pay off my credit card debt by my 40th birthday. And then there was a writer's strike and SAG BS, and my salary got cut by 15% (which is A LOT, yo). And I put my graduate school student loan into forbearance for the third time. On the plus side, I have made significant financial progress in terms of consolidation and interest rates, and so far in this downturn I am at least holding the line. Also, mortgages and family, lol. Maybe I'll be married by 40, but a house and kids would be a surprise.

2. Kick the debt cycle altogether - Despite item #1, I'm actually pulling this item off pretty well. Finally. I did really good last year, and I've been firmly only spending what I can cover since the beginning of 2009. And I'll be driving my '94 Corolla until my career finally takes the turn I'm working my ass off for.

3. Get serious about retirement - Yeah. So I was finally able to open a 401K again, post film school... and then see item one. Ultimately, I had to stop my 401K contribution. As far as retirement goes, I hope I drop dead on set between action and cut. That said, I am worried about the possibility that I'll get sick and be unable to work as long as I'd like, not to mention that people in my family live a LONG time, so while I certainly hope to be working in my 60s... maybe it's unrealistic to think I'll be working in my 90s. So when I get my salary back (knock on wood), I'm definitely going to restart my 401K contribution, even if the percentage seems paltry.

4.Diversify your investments - My only investment is my 401K, and it's fairly diverse. And no one will ever call me risk-adverse, that's for sure.

5. Continue to learn - Hey! I've got this one down cold.

6. Protect your assets - My first instinct here is to lol, since my assets are a '94 Corolla, a refrigerator, my computers, some nice dining room furniture, and a small diamond ring. That said, I do have renter's insurance (because damned if I'm going to lose what I've got). Also, she's talking about your emergency fund here. I've got the first $1,000. This is another thing that took a blow in the pay cut, not that I was saving that much anyway, but it was regular saving, which was new for me. Sometimes, I do the math on saving 10% of my salary... and then I have to lol again.

7. Live simply - I'm honestly working on this. It's challenging to simplify when you're already not "living large" in a town where you're surrounded by people with A LOT of money and A LOT of people living like they have more than they do. But maybe that's everywhere in some ways.

8. Make your will known - Goal to do by 40? It's difficult to imagine that this is really that important for me.

9. Get a life... insurance policy - Hey, I just did this! I couldn't help thinking though, that most people get life insurance to protect their kids, and I just got mine so my debt is covered in case of my early demise. Somebody take the rest and shoot a film, k?

10. Be charitable - I'm pulling back on donations this year because I gave too much last year. The article also mentions giving of your time, of course. Hoping I've got more of that to give in my 40s.

So that's my review of these items, however, I would like to posit that if the camera adds 10 pounds to your weight, the entertainment industry subtracts 10 years from your life age. I suppose you could think of it as being 10 years behind, but either way, 37 here doesn't mean what it means in other places. I live with a roommate; I've barely started my career; I don't intend to retire in my 50s or even my 60s unless I have to, and I suspect there's at least a chance that I may be doing a lot of things in my 40s that people traditionally do in their 30s. So with that in mind, I think I *am* going to review the 10 Financial Commandments for Your 20s, too.

What I'm Not Spending Money On In 2009

My financial situation changed dramatically at the end of 2008. I took a major pay cut at work and then decided that so long as I was taking a financial hit it might as well hurt even more - So I went from two posts a week for BlogHer to one. Good for my sanity, bad for my wallet. Stunningly bad for my wallet.

The other thing that happened was that Unnamed Credit Company tried to raise the rate on my last in-use credit card. A lot. From 5.99 to 14.99. So I had to opt out, which means the account closes and locks at the current rate. (Which I believe is technically a certain percentage over a certain government set rate. 5.99 is lower than it was when I got the card.) I wasn't using it that often anyway - But I was still using it on occasion. To buy a planet ticket before I had the money in hand, for example. By the time I have the cash to buy my plane ticket to Chicago for Blogher, it's probably going to be $800 the way it's looking now. Sigh.

So coming into 2009 I've got a whole new lower annual salary and no credit card that I care to use. So not so much with the buying:

1. magazines - This feels like an organic decision. I simply don't have time to read them anyway and reading content on paper is feeling stranger and stranger. So the only subscription I'm renewing this year is my Hollywood Reporter, which is a business expense.
2. donations - Passing the losses on. I donated a lot of money last year (for me at least), and so I've decided that this year I'm not donating anything to anyone.
3. facials - Last year I was finally able to get the occasional facial. It makes a HUGE HUGE HUGE difference in my skin. Sigh. This will be this first thing I book if I ever get my salary back. That and a hair cut.
4. salon shampoo/conditioner - Another thing I'd just stepped up to in 2008, and it makes such a difference it's insane. And insanely expensive, so back to the I-Hate-Every-Shampoo-And-Conditioner-I-Try drug store for me. (If anyone's got a recommendation for thin, sensitive hair, please let me know. I was using Bumble & Bumble Gentle with the Thickening or the Super Rich conditioner.)
5. clothes and shoes - One good thing about 2008 is that I had real money to spend - for almost the first time ever. And I bought a lot of things I needed, including clothes. And boots. And sweaters. Now I have nice clothes to wear to work and clothes to wear when it's cold - It's awesome, truth be told. So now my goal is to not buy any new clothes or shoes this year.
6. bottled water - Brita and Sigg bottle engaged!

So what does this leave? Well, mostly I already spend money primarily on business expenses as it is. And I still get my eyebrows done - although I've changed from every two weeks to every three (which drives me crazy, but saves money). The other regular "luxury" items I spend on are my facial products and yoga. I'm also going to need some plane tickets this year - fingers crossed I get a decent tax return. Oh, and I do spend money on good food. Fresh veggies and the like. My health and appearance are priorities to me, obviously.

One more note on something I struggle with. I'm certainly aware that to a family struggling to get by this list is... full of things they stopped buying long ago, if ever. I know what it's like to cancel a doctor's appointment because you can't pay to park outside the office or you don't have the copay. I know what it's like not to have money for food. I know the fear that comes from being terrified that you will need money for a car repair and simply won't have it. (And I am beyond thankful for the metro I had the good sense to move next to.)

I also spend my life around people with nice houses and nice cars for whom salon expenses aren't something they give any thought to at all. Sometimes it feels like I've spent my whole life like this - caught between the haves and have nots. I find it very confusing when I let myself think about it. I don't know where I fit or what's "right" in terms of spending.

So for now, I'm just focusing on my 2009 mantra: "If You Don't Have Any Money, Don't Buy Anything." So far, so good. And I am very thankful that I'm still able to spend money on some of the things that are important to me.

Do You Claim Items Received For Review As In-Kind Income?

Because I have in the past.  Written everything I've received down with values, tallied it up, and claimed it as other business income on my Schedule C.

But I've never read anything written about this specific situation. Which is getting really annoying, because Holy Hell the entire blogging world is receiving freebies for review, and I'd say most personal bloggers keep the items. Is this issue just totally cut and dried and understood by everyone but me?

And because, this year the number is fairly significant. So if I'm not supposed to be claiming goods received for review as income (note, I don't return the items), it will make a significant difference to my taxes this year.

When in doubt, I'll claim the items as income and eat it. I always err on the conservative side.

But I would really like to read a couple posts or articles on this specific issue, and you'd think that in 2009 I'd be able to find dozens of them through a simple Google search. And btw, I have to do my taxes STAT because I need my tax return to buy my massively overpriced (why!? why!?) plane ticket to go to Chicago in July for BlogHer, and if I actually made a profit this year, and am therefore *not* getting a tax return and maybe even have to pay, I *really* need to know. There's definitely a chance that this year is the year but you can be sure I'm in the window where any profit will be completely eaten up by self-employment tax.

Can you tell that my taxes make me a little tense?