You need motivation and incentive to save money.
We all have habits that we don’t even think about, habits that we don’t even question. We brush our teeth, we take showers, we pay our bills, we answer the phone, etc. After all, we don’t say to yourself, ‘oh I am really not sure about brushing my teeth, I just can’t get off the couch today, it’s too hard. What a waste of water, my teeth are never going to be as white as I’d like them anyway.’
On the flip side, there are behaviors that we constantly question. Exercise and eating healthy often fall into this category. We tell ourselves that we are born this way, or that athletic people have some hidden genetic advantage. I know when I go jogging by myself, my internal voice tells me the entire time that I should walk. After all, I wouldn’t want to push myself too hard, right?
But, it doesn’t have to be this way. The fact is that most of us are really setting low standards for ourselves in many ways.
When it came to saving money, I had to hit a real low point before realizing that I just couldn’t live that way anymore. For the last 13 years I have been a stay-at-home-mom. Before that I was a teacher with a pretty good salary, great health insurance, and assured retirement. At 35 I even purchased my own home. (I met my husband a year later).
When I had my son I decided to stay home with him. At that time my husband was a plumber and it was 2006—the beginning of the last recession. We had many tough years and I did try to make some side income during most of those years, but it never amounted to much. We lived in my home, while we rented out my husband’s home. That rental income really saved us.
In 2012, my husband switched back to Commercial Fishing (his original career and love was as a tug boat driver, but as jobs diminished, he found work as a plumber and in 2005 he started his own plumbing business). He purchased his own boat with cash we were able to use when we refinanced our homes. Getting started was really tough then too.
But, it wasn’t until we were audited by the IRS that a spotlight was shone onto our finances. All told, we were audited for 2012, 2013, and 2014. This meant that, as our bookkeeper, I had to do all of the tax prep for each of those years again. During those years, I was very new to preparing that type of paperwork and unfamiliar with fishing terminology. My husband is not a desk-type guy so he was of little help; our accountant treated me in an offhand way—as if I certainly couldn’t understand the business. We were at the beck-and-call of the auditor. I remember driving to different branches of Wells Fargo to get printouts of all of our deposits for one of the years. We even had to go through old emails to prove that we actually purchased a boat! After months of stress, fighting, and tears, we found out that we did not owe anything.
This meant that I’d prepared the taxes correctly. At the time that was a huge boost to my confidence after months of feeling like a complete failure.
We thought that nightmare was resolved until one day, about a year later, I went to the mail and another of those telltale envelopes was waiting for me.
Apparently, our 2014 taxes had not been resolved. With taxes and fees and late charges and charges on charges, we owed $27,000.
I would have loved to have the IRS come visit so they could find that $27,000 because at this point we were struggling. Trust me, we were not holding onto that kind of money.
We were new to fishing. The boat, like all boats, was in constant need of repair. Then, there are days of bad weather and no fish. It’s an understatement to say that it is a never-ending roller coaster ride of highs and lows.
Things got pretty ugly around our house for what seemed like a Very Long Time.
First, we couldn’t even locate a phone number to deal with the problem. Our original auditor had moved or was hiding behind the IRS Black Veil of Mystery. Other phone numbers simply handled your payment and had no access to your account at all. It was as if the representative was passing the phone around in a puny office. I pictured them chewing gum and doodling while they said, very nicely of course, ‘Okay, well your first payment is due in July.’ We called this same number over and over for like, three days, before we realized they actually didn’t have any power at all and were likely an outside company hired by the IRS.
The phone silence was literally shocking.
Finally we called an IRS Assistance group that works as a go-between with you and the IRS. We hit the nail on the head, but again, I had to prepare the taxes and organize them thoroughly and again we had to go through a back-and-forth process which took months. In the end we did owe money, about $800, that ended up being over $3,000 in late fees and interest charges.
That was last year.
We paid our past due taxes and I guess I looked around and reassessed. I was working more, my husband was working more. But we literally had nothing to show for it.
To be honest, I never felt so low. I really saw myself in a different light. Though I did not grow up rich—we were even really poor for some short stints of time, I always felt rich. My dad worked in real estate and he had some real ups and downs. But I always felt like I was on the Up Side. Underneath I felt like I was wealthy.
My view of my self and my life was really starting to wobble. At this time I didn’t sleep well. I’d wake up in the middle of the night and worry about my kids and our homes. I worried about how unprepared we were for an emergency. I noticed my thoughts—especially when the kids or I had a dentist or doctors appointment. I’d think, ‘maybe we should put it off.’ If one of us was sick I hesitated when it came to making a doctor’s appointment. I felt like a terrible parent.
I had spent months looking at numbers. Our Numbers. They were hard and cold and black and I knew I had to rally and take control before we were sunk.
The first thing I did was look at the obvious: our health insurance. I looked over our plan—it was almost $1,000.00 per month. I noticed a section in our online account and we had spent less than $500 that year. I’d had two doctor’s appointments and my kids had had one each. My husband did not have any. My insurance did not cover my prescriptions until a deductible was met—which usually happened towards the middle of the year. The thing was that we could have paid cash for our appointments and it would have been less than a months dues. I also knew that if we didn’t start saving now, we would be a real burden in retirement. It killed me to do this, but I applied for Covered California. I don’t what it is, but I have always felt strongly about paying my fair share and asking for assistance felt really crappy to me.
Still, I could see that it was a necessity.
I vowed at that moment, that if we were given a subsidy that paid for our health insurance, there was no excuse for me to not put the difference away.
That decision turned out to be a good one. One thing became very clear: that extra money must be turned over to a savings account.