Instead of getting depressed, I like to think of starting over as the sunrise on a new day. A chance to start fresh and better than before.
This post was written on Tuesday evening, lest you think I’m out walking to the post office at three o’clock in the morning. :)
Well, I did it. Today, after balancing my checkbook, paying the bills, and making sure all money transfers were in place, I wrote out two checks totaling over $5300. Yes, I paid the IRS and the State of Oregon for the taxes we owed.
Writing the checks was difficult. Entering the transaction into YNAB and seeing the balance of my emergency fund drop to nearly zero was painful. I had my husband sign the letter we had to write to the State of Oregon, explaining why we owed so much in taxes. I sealed the envelopes and walked down to the post office to mail the tax payments.
As I walked, I started thinking about where we were financially. A couple of years ago, having to pay over $5000 in taxes would have broken us. We would have worked out a payment plan to the IRS or put our payment on a credit card.
A year ago we would have had the money, but it would have scared me to cut our emergency fund down to zero. I would have charged at least part of the payment on a credit card to make sure we had enough money left for an emergency.
Suddenly I felt liberated. I cut up my credit cards a few months ago, so charging my taxes wasn’t an option. And I certainly didn’t want to be indebted to the IRS. I realized that for perhaps the first time in my adult life, my husband and I had the money in hand to cover a major expense. And that was exciting!
So here I am, starting over and trying to build up my $1000 emergency fund again. But instead of being discouraged, I’m energized! I feel like the goal of getting out of debt is within reach! After all, we managed to save an emergency fund big enough to cover $5000 in taxes. We can certainly pay off our debt.
So what’s my plan going forward? I’m going to snowflake every bit of money I can into our emergency fund until it reaches $1000. I honestly don’t think it’s going to take more than a month or two. Then I’m going to pay off that Citibank card. I only have $569 to go, so that should only take another month or so.
With the Citibank card paid off, our only debt left will be our student loan, which is right around $9000. Because it will take so long to pay that off, we’ll probably save a little bit more of an emergency fund before we use our gazelle intensity to finish off the debt.
And the Economic Stimulus Rebate? After reading all of your comments and talking it over with my husband, we’re going to take that vacation. We’re moving along well with our emergency fund rebuilding/debt-repayment plans, despite the tax setback. We need some time to reconnect and relax as a family.
Now the only question to answer is where to go on vacation. Any suggestions?
Photo by clspeace.
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Hooray, Lynnae! I’m so happy for you–you’re definitely seeing the benefits of having a savings plan and it’s so inpiring.
I hope that you’ll get your $1,000 baby emergency fund built up soon.
I think it’s a reasonable idea to have a larger than $1k emergency fund before really attacking that debt.
Since my family is one-income (primarily) too, we’re going to have our full six-month fund before attacking our debt. I’ll just sleep easier that way.
I look at paying in extra taxes as a badge of pride. It indicates that you’re trying to build something for *yourself* independent of an employer. It’s one of the biggest pieces of financial freedom – and you’re doing it. Congratulations.
I’m hoping you owed so much because your blog had become so successful… other than that, good grief that’s a lot to owe!
Congratulations! Doesn’t it feel good to look back and see where you’ve grown from? I think once you’ve mastered the skill of saving and living on less than you bring in – it’s just a matter of time until the debt is gone and the EF is back up to a comfortable level. Good work! As far as a vacation is concerned – I still think you should come to Texas!
Blessings!
Lynnae, I understand completely. Our car troubles have tested our emergency fund, and I get a real sense of unease when I see its balance drop.
But you’re right–what is the alternative? Credit makes you feel better, but it’s a false sense of security.
I appreciate your transparency.
Thanks everyone. I know that eventually the amount in the EF will go up and the debt will be gone. It’s hard to be patient though!
@Michelle – My husband would probably love to go to Texas. It’s where his dad was from, and he’s never been there.
Lynnae, that’s a wonderful achievement, and something you should definitely be very, very proud of. The $1000 emergency fund will seem like small potatoes after this. Way to go!
It’s a good feeling isn’t it? Knowing that you’ve done the right thing and it pays off! You’ll have the EF built up soon. Have a great tine on your vacation! Let us know what you decide on.
Lynnae,
That’s awesome! Considering that almost every penny of our $75,000 debt is back taxes, I envy you that peace of mind. I can’t wait till the day we write that final check to the IRS.
As for the vacation… I’d go someplace with no cell phone coverage and no internet. Recharge in peace.
Vancouver BC, totally within driving distance (or train!), you get to play with a different currency (with ducks on them!), and it’s full of mounties, maple syrup and cheap sushi.
If you did get the train or bus up, Vancouver public transit it pretty impressive.
Congrats on being able to cover the tax bill, and keeping such a positive attitude.
It can be hard to spend the money you’ve been saving, even when you spend it on something it was meant to be spent on. I was really bummed out last year when a car repair set us back quite a bit, but at the same time happy that we had the money to cover it without going into debt, or even pulling money out of our emergency fund.
Lynnae, congratulations on having had the foresight to build up your EF in the first place! You’ve used it well, and I have no doubt that you’ll build it up again quickly, now that you’ve experienced the positive reinforcement of having it in the first place.
As for the vacation, go someplace warm and sunny! As a fellow Oregonian, I’m jonesing for some sunlight—maybe I can live vicariously through your vacation. . . .
Whoo Hoo!!!! Somehow taxes don’t feel like they are really your’s so it seems to be more aggrivating to have to pay them. Great job in doing so. Now, have fun finding ways to get that emergency fund in place- and enjoy your vacation.
WOOHOO!!! Nice going! Isn’t personal achievement a terrific ego booster! Nice going.
Now about that vacation – August at the Oregon Coast – my fav! Rent a little motor home and do the State Parks up and down the coast – great views, clamming, crabbing, tidepooling. Free admittance at the Tillamook Cheese Factory. Of course, I live here year round – lucky me, floods and all. Or pick up a book on NW Ghost towns and go camping eastern OR and WA, no cell phones, no TV, and really relax! Room for the kids to run to their hearts content!
For something cooler, try the forested mountain parks – we have plenty of them. Not too expensive, and still fun and relaxing. Enjoy!!!
The mountains. :)
Congratulations! Even though it can be tough to use money in an emergency fund, it is a really good reminder of why we all need one. Where are you off to on your vacation?!?
I think owing the taxes is a good sign: you aren’t giving the government a 0% interest loan for 12 months! PS congrats on the vacation, you guys will have a great time.
How much are you getting in your package? $600 or $1200? I think you should go to Skamania :D
http://www.skamania.com/
Sean and I went to the Skamania lodge near Stevenson, WA (not too far from you) and stayed for two nights with a view of the Columbia river and and a fireplace. I think it was something like $250-$300 a night, which is certainly not frugal, but if you give up the fireplace and the view, that much could get you a room with two beds. The land was fantastic and the lodge was really fun.
My favorite part? They had a LIBRARY on the second floor looking down over the entire lodge, FILLED with board games! We were up playing all night :D They also have a golf course through the woods and you can rent a gold cart for $20 and just drive around the woods if you want ;)
Anyway, that’s the only suggestion I have. Going to the Oregon coast would be another awesome idea, although I hear the weather’s still kind of crummy there.
Good luck finding a place to go! I’m happy you’re feeling so good about your current situation.
Keep the vacation ideas coming! There have been some great ideas so far!
My son would love to take the train, so I’ll have to look up the fares to BC. I’ve never been to Canada, so that does sound interesting.
The Oregon Coast is always fun, as are the mountains. We’re going camping on the coast in August, so we may opt for something different for our family vacation.
@Shanti, I’ll check that place out. It sounds great! We actually get $1800, because of the kids. :)
Before we make any decisions, we have to see how much time off my husband can get, being as he’s so new on his job. That will determine how far we can go, because we might be limited in drive time.
For that vaca – have you thought about the Black Hills of SoDakland? Mount Rushmore, buffalo roundup at Custer, Needles Highway, Badlands… beautiful place :)
It’s a wonderful story Lynnae… my husband and I had our tax fund savings account set up at ING and we were prepared to give the money to the IRS if it was necessary, but I would have had the same uneasy feeling as you’d have had a year ago. I’m glad it went our way this year, but I really like your outlook of taking it as an opportunity to start over and a challenge. I’m passing your article on at my blog today. Homemaker Barbi
Congratulations! I can’t wait for the day that I have a sizable emergency fund. For vacation, I would either go someplace fun and cheap such as Las Vegas (if you don’t gamble much) or maybe look into a house share or cabin rental somewhere.
We are using some of the rebate to pay on debt, some to start a Disney vacation fund, and some to pad our emergency fund (33% each).
Great job! Now rebuild it! :)
Congratulations on using your emergency fund! It’s great to see a person actually using theirs & then building it back up, that’s what it’s for right?
I can of course recommend Australia for your vacation but not sure what you have in mind. :-)