It’s that time of year again. In our family I do the taxes. We tried using a professional but really didn’t find it worth the money, so this year I am back to doing it myself (I actually enjoy it; they don’t call me the Spreadsheet Queen for nothing). Because my business is a “sole proprietorship” the taxes are made easy: myself and my business are one and the same, more or less. As for Husband, this year was his first year as a completely self-employed person, which really just meant a bit less paperwork I had to shuffle through.
Completing the return was fairly simple, but the end result was sobering. I knew I’d been slacking off when it came to setting aside money each month for taxes – one of the hardest parts of being self-employed, I’d say. It was too easy to think “oh, I’ll do it next month” because I am so loathe to leave any credit card balances unpaid beyond the 30 day interest-free period. But 12 months sneaks up on you faster than you think, and when I calculated our total owing I was a bit shocked to see how poorly we (okay, *I*) had done at preparing for this.
Perhaps it was fate that had just a day or two before brought me to the Man vs. Debt website. I enjoyed perusing the site; it reminded me of 3 years ago when Husband and I decided we were going to move to the country and instituted a strict budget and debt-elimination plan. In two years we had paid off a significant amount of debt, saved up enough for a downpayment, and moved in here debt-free (except for the new mortgage).
You’d think after working so hard to get rid of debt that we would be especially loathe to get into it again. But this experience has shown us that it’s not always that easy. Along with my slice of humble pie is the recognition that I slipped back into that old habit of using my “gut feeling” to guide my spending. You know, you figure you have a good idea of how much you have to spend on stuff and you mentally add it up and it all seems good. But that sort of financial management is exactly how we got into debt in the first place years ago. And it’s what happened this time, too. Credit cards paid off every month? – no problem. Couldn’t be spending more than we earn now, could we? Turns out you can when you’re not withholding sufficient tax from your income!
So, the bottom line is that we’ve managed to get ourselves back into debt. It’s not at a level we can’t handle; it’s not the sort of debt to threaten anything we own or require some massive change in lifestyle. But it is definitely going to cramp our style. We are back to a strict budget (meaning we keep track of spending throughout the month, rather than tallying it up at the end) and, other than withholding our own income taxes, every extra cent will go towards debt reduction. It shouldn’t take us too long to be back in the black, but long enough that a whole growing season will have passed on the farm.
And that’s the real sad part of all this. A number of projects are going to be put on hold this year, including perimeter fencing, permanent pig paddocks, planting large numbers of fruit trees, earthmoving (swales and ponds) and other things on our list. It also means the new distillery building is on hold, though I think we are going to be able to make do with our garage for now. It’s a real bummer, but of course it could be a lot worse. We’re looking at a lifetime here, and having to wait a year is not going to make much difference in the long run. Meanwhile, our disappointment and frustration will be put to good use as we re-commit to keeping a budget (even when debt-free) and of course, withholding the right amount of income tax!
So, that’s our sad tale. I debated posting this because frankly it’s embarrassing. Especially after all the posts I wrote about financial health back when we were still dreaming about rural life. But I decided in the end to do so, because I think its important that we all talk about money and debt to keep us on the right track. My generation grew up with the notion that buying on credit was normal, and that is a hard thing to shake off in our consumer-driven culture. I hope by putting it out there I can inspire others to keep a close eye on their finances, even when things are going well.