More Money Podcast - 014 Climbing Out of Debt by Living like a Frugalista - Catherine MacLean, Blogger at Plunged in Debt

Episode Date: August 19, 2015

It's not easy being in debt while supporting a family. Catherine MacLean from Plunged in Debt and I talk about her debt repayment plan, her new frugal lifestyle and what tips and tricks she uses to cut back on spending to balance her budget. Long episode description: In this episode I talk to Catherine MacLean from the personal finance blog Plunged in Debt. From the name of her blog, you can guess what it’s focus is on. Catherine and her husband have a huge amount of debt to pay off, and it hasn’t been easy. On top of that they are a young family with a 3-year-old daughter to provide for. Fortunately, Catherine is one financially savvy lady and writes about all the different ways she’s found to cut back and save on the little things. If you’re in debt and need some motivation to stick to your budget and kick your debt to the curb, you definitely need to check out Catherine’s blog (and listen to our podcast episode). In our conversation, Catherine and I mentioned a few of her most notable blog posts, so here they are below for you to check out. I’ve also given some shout outs to some iTunes reviewers, so check below to see if one of them is you! Blog Posts Catherine Mentioned How I Dress My Kid on a Budget Would You Marry Someone With A Lot of Debt? Financial Success Does Not Start With a Budget What I Gave Up (and Gained) to Reach My Financial Goals No More Babies Until Debt is Gone Shownotes: jessicamoorhouse.com/14 Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello, and welcome to episode 14 of Mo Money Mo Houses, the personal finance podcast with a dash of sass. I'm your host, Jessica Morehouse. And today I'm going to be talking to the lovely Catherine McLean from the personal finance blog, Plunged in Debt. Very much looking forward to talking to her because her blog focuses on ways to save, tips and tricks on how to cut back and just be smart with your money, really. And she also has really huge debt repayment goals. We're going to get into that as well. Thanks, Catherine, for being on the show today.

Thank you for having me. You're welcome. Um, so I definitely want to kind of let's kind of just jump into it and let's start talking about kind of what was your relationship with money growing up? Because it's interesting to see just from your blog, you know, you're very frugal focus, which is awesome. You always have such great advice and, you know, ways to save money. Were you always like that or did it just come with time? I, uh, no, I think, I think I was sort of brought up in a house, like I was brought up in a single family or single parent household. Um, so I think frugality was always sort of focused a little bit, but my mom was also sort of weird with her relationship with money. She was really frugal.

Like, so I knew how to find like really good deals at the grocery store and I knew what a good price on certain things was. So I sort of had that idea, but at the same time, like my mom would, you know, if chicken was on sale, it was a really good price, but she would like buy exorbitant amounts of it. So, you know what I mean? So it was sort of weird. So like, I would almost think like if it was on sale, that was a good thing. And like, you should buy a lot of it, which is not the case. Right. So it was, you know, so no, my relationship with money has sort of evolved. Since my childhood, like I had little bits of good pieces of foundation and then I had to sift through it as I was growing up and being like, okay, you know, figure out what was, what was good and what wasn't. And so, um, so you went, so your kind of story is you grew up and

you went to university because part of your story is that you have student loan debt, right? Yes. So what did you go to school for? Um, I did an undergrad in biology and then I went back and did a degree in dental hygiene. Oh, wow. So you have two degrees. Yes. Yeah. When I started, um, university, my intention was always to, I thought when I graduated high school, I was going to do pharmacy and then things sort of changed and I changed my mind about things. And before I knew it, I had an undergrad degree. Yeah, no, that kind of happens. I find with lots of, you know, millennials, you'll like myself included, obviously going to film school. So I'm definitely not a filmmaker. Most people go to school for one thing and go back

to school. And I went back to school like five years after my degree. So it's kind of normal, isn't it? Yeah, I think so. Yeah. So you went to school. When did you meet your now husband in between all of that? We met in grade 11 physics. Oh, wow. A long time ago. Yeah. No, we didn't start dating until grade 12, but physics was not my strongest subject in high school and he was very good at it. So I clung to him. That's awesome. I picked up pretty quickly that he was good and he could help me with homework. I love that. And that's the history. Yeah, that's amazing. So you went to school for biology. Did you work in between or did you go just do one degree and one after? Oh, sorry. In terms of degrees, I mean, I've always had a job, but no, I did one degree

right after the other. Oh, wow. That's a lot of school. Yeah. And so I guess that kind of makes sense. All the, so did you have to take student loans for all of that? Um, uh, student loans and lines of credit too. Oh, really? I didn't actually, um, I didn't actually qualify for student loans until I was considered an independent, which is when I was done my undergrad. Um, as my mom had a good job, so she, uh good job, so family household income was too high. So I didn't qualify for a student loan until my second degree. So I had less credit until that point. Okay. And so after both your degrees, what was kind of the damage after that? Total damage was just under $80,000, I believe, for the education alone.

Wow. That's a hefty number. It's a big number. A bit intimidating. It was. But I mean, at the end of my first degree, it was around $40,000. And I sort of had this moment like, oh, Lord, I have $40,000 worth of debt. What am I going to do? Because I mean, not that any education is wasted, but I knew I was sort of limited in my options with an undergrad degree. So I decided pretty quickly that I was going to go back to school and take on more debt. But you know, my second degree led me to an immediate job, an immediate well-paying job. That's awesome. Yeah. So I had, I had some security in knowing that I was going to graduate with a, you know a good pay and I'd be able to work on this eventually.

Exactly. Which is awesome because most people I think these days, again, myself included, doing a fine arts degree. And a lot of people go to school thinking they want to do, oh, I don't know, fine arts or history or there's all these degrees. I always just feel so bad when I find out someone is majoring in philosophy because I'm like, what is the job after that? It's called more school. That's what it's called. You never want to tell somebody that, you know, it might not be the most lucrative career choice

or education choice, but, you know, who's to say that person in fine arts isn't going to go on, do amazing things. Right. And that's where it's kind of tough. Right. That's true. And it's true. It's if someone told me, you know, my parents were very supportive of my decision to go to film school, but if they weren't supportive, I probably would have done it anyway. So. Yeah, no, but there are certainly, there are certainly, you know, lucrative and not lucrative career options in terms of post-secondary education. Absolutely. So once you graduated, you got your job, was that kind of the point that you're like, I need to start really focusing on paying down this, you know, huge amount of debt? Not really. I mean, yes and no. I mean, I graduated and I knew that, you know,

I had this, you know,-month period where I was like, I really got to figure out what I'm supposed to do. I knew that the minimum payments were going to have to get made. But to be completely honest, I didn't really know where to start. I mean, it seems silly. Just put more on it than the bank is asking you for or whatever, right? But it's like I didn't really know what to do. And we had just moved out. We were engaged. We were getting married. All this stuff was happening.

And there was other priorities in my life in terms of, you know, how it was going. So it was not until I would say after we, cause we were married like a few months after I graduated, it wasn't until after we were married and sort of settled and all of these expenses were settled that I was like, okay, what do we do now? Because I knew that we had to work on it, but I didn't really know where to start. So I sort of ignored it. Like, I mean, I always made the minimum payments, but I never really figured out what I had to do to get out of debt. Like I really just accepted like it was student debt and I was going to have it, you know, for 10 to 15 years and it would just be dealt with eventually. So what was kind of the breaking point where you're like, I need to, I need to like aggressively tackle this like you're doing right now?

So I finished my second degree in 2009. And it wasn't just, again, always just sort of making minimum payments. And then it wasn't until I found out that I was pregnant in 2011 or yeah, 2011, I found I was pregnant that, uh, I was like, okay, there's another person. Um, so I really became panicky throughout my pregnancy and then, you know, into when she was born because not only did we, you know, it was the debt. Yes. But as well, like, you know, we wanted to put money into an RESP for her. Like, how are we going to do that? Like there was just so many other, um, things that we had to think about. So it wasn't until after, um, our daughter was born that we got really serious about it. And we just sort of said like, okay, enough is enough. We it's,

it's her life too now. And it's not fair for her. We really need to grow up and figure out what we need to do. Wow. I mean, yeah, that'll definitely kind of kick things into high gear when another person is involved. That's for sure. Yeah. So what, so, you know, you kind of mentioned like you didn't really know where to start. Where did you start? Um, we started because, well, I mean, when I went on maternity leave, um, in Canada, you're entitled to 55% of your income to a maximum of, at the time it was it was $457 a week, which ended up being about 35 or 40 percent of what I was taking home. So a massive pay cut for our house. And at the time, my husband's job was not paying him very well. He has since gotten a good raise. But anyway, so it was living on the tight income was the first thing because we realized pretty quickly that we had to sit down and actually figure out our exact numbers if we were going to survive. So that was the first step.

We actually added all their bills up, figured out what we had coming in from me being on EI plus my husband's job at the time. And that was sort of the first step. And then from there, yeah, from there, I think we just sort of, we decided that we were going to get out of debt, but we knew that it wasn't really going to happen until I started working again. But it's the first time that we really looked at our numbers. And I remember reading one of your blog posts about how you guys did make a budget and you, you know, to the kind of dollar, but it didn't really work out how you wanted to. And sometimes I'm the same way. Sometimes I'll make a budget. I'm like, this is the perfect budget. And then putting it into practice is actually kind of harder than, you know, said

than done. So is that kind of something you, you know, a lot of trial and error at the beginning? Oh, absolutely. I don't think anybody can set a budget and have it work perfectly. Like I just don't think it's possible. Like we, and we sort of jumped into it without, you know, we didn't look at like our, you know, three to six months worth of expenses or anything like that at the time. You know, we just sort of jumped into it, knew what we had coming in, knew what we had to provide or, you know, our bills and expenses. And, you know, and again, I went through and I did it, but I, you know, I was like, okay,

well, you know, we won't need our haircut for a year, you know, just really foolish things. I'm like, well, the reality is, is that we're going to need a haircut. So I wasn't accounting for things that I knew we wouldn't, you know, and for me to think like, no, there's no way that we'll ever eat out. And it's like, you know, I knew that we probably would like, yeah, it would be drastically cut back. But you know, if we want to, you know to get a pizza every once in a while or something silly, it was going to happen and the money had to be there. So I was way too restrictive with the first budget.

And so then you kind of just focused on like, okay, let's actually look at our long-term expenses and then just kind of figure things out from there. And that has been successful so far. Yeah. And it, and it, it can, the budget continues to evolve, to be honest, like, you know, things come up and things change and, you know, like, you know, just recently my, my husband's work decided to take over his cell phone bill. You know what I mean? Like, so that that's an adjustment that we have to make on our end as well. So I't think that it's ever going to be a static thing you just set and forget like it's just going to continue to evolve as your life changes you know our daughter is now you know getting into things like soccer and dance and like those are now things that I didn't have to think about last year but now the you know I have these fees that I gotta think about and I gotta figure

out where it's coming from from the director of The Greatest Showman comes the most original musical ever I want to prove I can make it prove to who? Everyone so the story starts Better Man now playing in select theaters and have you talked about like I'm not sure

but have you talked about like the possibility of expanding your family too? I mean we've talked about it. Yeah. I mean, it's not in the plan, so to speak. No, not right now. I mean, before we had our daughter, I wanted a house of kids because I have such a small family. I, as an adult, I love the idea of having a lot of siblings. And then we had one and for like a lot of different reasons, my life is just very content right now. Fair enough.

You know, and part of me can't imagine having any more. But then part of me can't imagine having it, not having a sibling. Right. So just trying to figure out which end of the spectrum we're at more. But no immediate plans right now. And right now we're so focused on the debt right now. I don't I don't really want to go on maternity leave again right now, to be honest. I know.

And I think that's really smart and responsible of you because I mean, I like, so me and Josh, we've been married for two years and we still always get the questions from friends and family. When are you going to start a family? And for us, it's like, you know what we, I feel like we have so much stuff to figure out, you know, financially and career wise. Like I kind of want to own a place before we start a family. And then, you know, like there's a lot of financial things that come into play before making those big decisions. So I totally get where you're coming from. And I mean, I really think that, I mean, I do, I really think that everything in life happens for a reason. And I mean, us being on maternity leave and having her and this, that, and the other thing, it was just an incredibly stressful time because money was so tight and all that.

But we've learned a lot from it. So I can't, we've learned a lot from it. And one of the things I learned is that I don't want to do it again. You know what I mean? Like it was, it was, it really was. It was an awesome learning experience to lose that much income every month. It was quite a learning experience. But I learned that I would rather not do that again. Like,

you know, I want to get most of the debt paid off before I even think about occupying my womb. Absolutely. And you do have like from your blog, you have the kind of date that you're hoping to get rid of your debt, which is this October. The, the, the, sorry, the first, the sort of the next phase will be paid off by this October. Oh, okay. Okay. We won't be debt free by this October. I've paid off one of, I paid off my provincial student loan last year. And then this October will be sort of the next loan, which is a big one. Like I think it's starting, the starting balance on this one was about 25,000. Wow. And it'll be paid off

in October, hopefully September, October. And then, yeah. And then from there, we're going to move on to the next one and the next one and the next one. But I think, um, the end end date was, what are we in? We're in the May of 15. Yeah. I think the end end date was mid mid 2017. Okay. Yeah. That's interesting that you mentioned that you're paying things off in phases. I don't think I've ever heard someone talk about paying off their debt like that. Usually people just kind of have a lump sum and they just have like an end date. But I kind of like that idea in phases because it seems a little bit more manageable, almost like not so scary. It's like when you think about, I mean, when we started, we started over $100,000. To think of

the end date of $100,000, it's impossible. That's yeah, it's like, how does one even get that much money? That's a crazy number. It is. So then when we, you know, my, my, the provincial portion of my student loan was pretty small. I think it was like $5,200 or something. So we took that off pretty quickly. That was paid off over a year ago now. And now we're working, we're focusing on another loan. Like I said, we'll pay off in October and then the next loan. So we're just so more thinking about it in terms of individual loans.

And we're not, you know, like the snowball versus the avalanche versus the whatever method. Like we're so not following that. We're really, we're more, we're definitely more emotionally motivated. Yeah, absolutely. So it's like, which one's nagging at us the most? That's the one we're going to work at. We don't care the interest rate. We don't care how long it'll take us. If it's nagging at us, that's the one that's getting our money. And I think that's the most important thing to realize too, for anyone who's listening that is going through our money. And I think that's the most important thing to realize too, for anyone who's listening that is going through something similar. Personal finance is personal. You've got to, you know, do your research, but also figure out what will make the most sense for you.

Yeah. And there's a lot, there's a lot of really great advice out there and you just, you really have to read it and, you know, digest it and, you know, make it applicable to your life. Like, you know, for me, it wasn't, you know, make it applicable to your life. Like, you know, for me, it wasn't, you know, it was, like I said, it's more like, which one's more naggy? That one works for me. There's, there's no, you know, method on naggy debt repayment. That's what we're doing. Absolutely. So what I also love is you're very, you know, strict and, and, um, awesome at being so aggressive at paying off your debt. But you're not just, you know, getting your salary and just putting it. You're doing other amazing things.

Like you've got your blog, for instance, which is another business. And I think you may have some other side hustles. But you also are really, and I love all of your posts that talk about just simple ways to kind of save money here and there. And I just recently read a post about how you save money buying clothes for your daughter, which is, you know, some people would just like, I don't know, buy whatever is maybe on sale at some new clothing store. But instead, you can go to some secondhand shop and you kind of, you just put it in an interesting way. And I'm like, huh, I've never thought about that. It's like,

not only is it way cheaper, but you know that the clothes are quality because they have been used and they look fine. Yeah. And like, and like I said, like when we go to the secondhand stores and stuff, I mean,

like I, in, I mentioned kids grow crazy fast. So like Maria has outfits that she's worn, like no joke twice. And then they don't fit her on time. Number four. So like Maria has outfits that she's worn like no joke twice and then they don't fit her on time number four. So yeah. What's the point of buying something brand new? Yeah. I mean, sometimes, yeah. So unless it's like some cheap little pair of leggings or something from Walmart for $3, I just, I don't. And the other kids are like, they're dirty and they are rough on stuff

and they don't think about it. They don't know if something's expensive. She doesn't know if I paid $50 for a sweater or $2 for a sweater and she doesn't care. It's true. But yeah, no, but I mean, we have found like all of her like name brand stuff. Like she's got some really nice name brand clothes, but I mean, I got it at the second hand store. I'm not going to pay full price for, like I said, like her Tommy Hill figure dress. I would not have paid full price for that, but I think I paid $4.99 for it and it's fine. It works great. And she's got like a Ralph Lauren sweater for $3. But you know, then we, Costco has really good kids clothes. That's full price, but it's like $8 for three outfits. Like you just, it's just, it's not an area that's worth my money to be honest. Like she can look really cute and not have to spend exorbitant amounts of

money. And that's a great way to think about your money. And that's how I most of the time do my shopping. It's like, that's not worth my money. I know how long it takes me to earn that money, and that's just not worth it. Nope, exactly. So I'm just kind of curious because you are really good with talking about little bits of advice and tips on how to save money and just, you know, live a frugal lifestyle like you so you can similarly get out of debt or just, you know, ramp up your savings. What other kind of tips would you suggest? I think from talking to people, like even today, I talked to one of my co-workers.

I feel like the biggest money pitfall in most families, especially like a couple, two or more, is food. Really easy to let grocery shopping get out of hand. And the easiest way to control that is to pay attention to food costs and to meal plan. And it's really overwhelming for somebody who doesn't do that. The lady that I was talking to today is similar situation. She's married with one child and she told me today that they spend $1,200 to $1,300 a month on groceries. Oh my God, that's as much as my rent. I said, and like we live in this, I'm like, yeah, you can get that down like a lot.

And she's like, I just don't know how. And I'm like, I don't know how you spend $1,300 a month. Like, I feel like we overspend sometimes and we're not anywhere near half of that. You know what I mean? But she's just, she said, I'm just so unaware of what things cost and how to save money. And that's a common conversation I have with my friends. Like my girlfriend decided she really wanted to pay her car loan off. So she started focusing more on what she was spending and where she was spending and it was food. So I feel like food is an easy, if you're looking for a starting point, food and groceries are an easy one because it's an area that we can often make cuts on. Like, you know, there's generic versus name brand and there's, there's ways of, of making really good dishes much cheaper. You just have to get creative and

learn how to do it. And it's overwhelming. And I've been there. But once you do it, it's like second nature. Absolutely. Yeah. It's an E. If you're looking for a starting point, like what category in my budget can I start making cuts from? I find that like that's an easy one to go for is food money budgeting or sorry, food money and eating out. No, I agree. That's definitely like whenever I look at, you know, what did I spend my money on this month is usually food. Yeah. And you got to restrict your trips to the grocery store because you go in for one thing and you come up five. And never go grocery shopping hungry, which is a terrible habit of

mine. It's awful. Yeah, absolutely. But yeah, I mean, in terms of, I mean, every family is individual, but you just sort of have to itemize what you're consistently spending money on and see if it is an area that you can find another alternative. Like my cat is on crazy expensive prescription cat food. But I found that it was, you know, I called another vet and it's $5 cheaper at their vet. You know, like things like that, right? Like I just made a phone call and if I can save $5 a bag, then I'll do it. Exactly. Things like that. Like she's going to be on the expense of food, but you know, you just got to figure out where your money's consistently going and if it is something that you can either cut out entirely or find another alternative. And maybe just go

that kind of extra little bit to save a little bit. I think lots of people kind of, you know, just think, oh, well, you know, $5 was $5. Well, if it's $5 every month for several years, for like 10 years, that'll add up to something pretty substantial. And like my little example of something similar to that that i'm a little proud of is that i bought this really expensive winter jacket because i'm from macouver and when i moved to toronto there's no way that i was gonna cheap out on a jacket because i don't know how to survive these winters still and um so i bought like a north face jacket and it cost me like 400 and it's still to my

to this day i'm like oh my god this is the most money I've ever spent on one article of clothing, but totally worth it. I never get cold in like minus 30, but after one year of wearing it, there was a rip on the inside of like, kind of like the seam. And I'm like, oh crap. The first idea I had, I'm like, well, I guess I'll have to go someplace and see if they can fix it. And maybe that'll cost me like $50 and blah, blah, blah. But then I'm like, wait, I bet I can actually look into their policy because it wasn't something that I ripped. It was definitely a defect with the jacket and see if they'll do it for free. And yeah, it was a little bit more work. I had to call their head office and I had to call some store and then I had to see if they were going to repair it.

Then I had to go to the store and give them the jacket on like a crazy snowy day. And I did not have a winter jacket. So it was very cold. But in the end they fixed it for free. So I just saved myself like 50 bucks. Absolutely. A couple of years, we bought a new bed a few years ago and I noticed two years, well, I noticed when I was pregnant that the bed was increasingly more uncomfortable, but I assumed it was because I was pregnant and uncomfortable. But then I had a good look at the mattress one day and again, the bed's only two or three years old. And I realized that it was completely sagging to one side, like the top of the mattress. And I was like, okay, this bed, like we paid a lot of money for it and it's only like three

years old. It should not be doing this. Like it looked like it was torn underneath or something. Anyway, I made a couple of phone calls and I got a brand new bed like a week later. That's amazing. Like they were like, Oh yeah, no, absolutely.

That shouldn't happen. So he, the guy at the store wanted me to take a picture. I took a picture, he sent it to the rep and then I went in and they gave me a brand new bed. That's awesome. It's just like little things that I think most people don't even think to do. Like, absolutely. If you have, if you don't know, just ask, like it may blow your mind. Or Google it, just Google it. Or ask or like, oh yeah. Totally. Yeah. Well, absolutely.

Well, thank you so much for being on my show today. I'm, it was so lovely to talk to you. It's nice to talk to you. I love when I emailed you, you're like, Oh, another East coaster. I'm like, I love that you think that I'm an East coaster. Cause when I, well, when I moved to Toronto and I was talking to some like Toronto people and I'm like, Oh man, living on the East coast. They're like, um, this is not the East coast. I like it is to me i'm from the west coast this is the most east i've ever been yeah no i was born in victoria oh really yeah so i'm west coast to east coast oh i didn't know that that's awesome my uncle lives there that's cool special heart for bc yeah love it there yeah. Thanks again for being on the show.

Thanks for asking. Thank you so much for listening to this episode and make sure to check out Catherine's awesome blog at plungedindebt.com. And for the show notes for this episode, it's momoneymohouses.com slash 14. And you can check out every episode atemoneymohouses.com slash podcast. And before I go, just going to give a few shout outs to some iTunes reviews I've gotten from my American listeners. Hey, first, I've got a review from Obois Cat. I'm glad to have found a podcast about finances. I have listened to two of the podcasts so far and both have been informative about how others are making it financially. I feel it will be a good thing to continue listening for moral support.

Thank you so much for that review. The next is from Melissa Bondar. Jessica has a terrific radio voice, keeps the podcast moving, and really seems to enjoy talking about money. She also picks terrific guests to interview with really interesting stories. Wow, thank you so much, Melissa. And the next one I've got from Kate door. I listened to all three episodes and I'm seriously digging it. Jessica's conversations feel natural and it's clear. She's genuinely interested in helping others with their money. I especially enjoyed the episode with Kate from blonde on a budget,

felt like I was hanging out with girlfriends talking money over a glass of wine. Well, thank you so much, Kate. That's totally what I'm going for. Really appreciate your reviews. And if you want to get a shout out on a future episode, make sure to leave me a review on iTunes or Stitcher. Thank you so much for listening again, and I will be back here next Wednesday. This podcast is distributed by the Women in Media Podcast Network. Find out more at womeninmedia.network.